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Bert Company must decide whether to make or buy some of its components. The costs of producing 61,100 switches for its generators are as follows.
Bert Company must decide whether to make or buy some of its components. The costs of producing 61,100 switches for its generators are as follows. Instead of making the switches at an average cost of $3.10 ($189,410 61,100), the company has an opportunity to buy the switches at $2.90 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated. (a) Prepare an incremental analysis showing whether the company should make or buy the switches. (b) Would your answer be different if the released productive capacity will generate additional income of $31,600? Bert Company must decide whether to make or buy some of its components. The costs of producing 61,100 switches for its generators are as follows. Instead of making the switches at an average cost of $3.10 ($189,410 61,100), the company has an opportunity to buy the switches at $2.90 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated. (a) Prepare an incremental analysis showing whether the company should make or buy the switches. (b) Would your answer be different if the released productive capacity will generate additional income of $31,600
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