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Blossom Company must decide whether to make or buy some of its components. The costs of producing 60,000 switches for its generators are as follows.
Blossom Company must decide whether to make or buy some of its components. The costs of producing 60,000 switches for its generators are as follows. Direct materials $29,000 Direct labor $25,000 Variable overhead Fixed overhead $14,000 $76,000 Instead of making the switches at an average cost of $2.90 ($174,000+60,000), the company has an opportunity to buy the switches at $2.65 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated. (a) Prepare an incremental analysis showing whether the company should make or buy the switches. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses eg. (45).) Direct materials Direct labor Variable manufacturing costs Fixed manufacturing costs Purchase price Total cost $ Make Net Income Buy Increase (Decrease) $ Blossom Company will incur $ of additional costs if it the switches. (b) The parts of this question must be completed in order. This part will be available when you complete the part above
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