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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 $44,000 Fixed overhead $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. 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 e.g. (45).) Make Buy Net Income Increase (Decrease) Direct materials $ $ Direct labor Variable manufacturing costs Fixed manufacturing costs Purchase price Total cost $ Blossom Company will incur $ of additional costs if it buys the switches. Would your answer be different if the released productive capacity will generate additional income of $45,500? (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Make Net Income Increase (Decrease) Buy Total Cost Opportunity cost Total cost $ the answer is The analysis shows that net income will be by s Click if you would like to Show Work for this question: Open Show Work
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