1. Boston Exemcutive, Inc., produces executive limousines and currently manufactures the mini-bar inset at these costs:

   	Cost per Unit
   Variable costs:
   Direct material	$960
   Direct labor	640
   Variable overhead	290
   Total variable costs	$1,890
   Fixed costs:
   Depreciation of equipment	$490
   Depreciation of building	190
   Supervisors salaries	300
   Total fixed costs	$980
   Total cost	$2,870

   The company received an offer from Elite Mini-Bars to produce the insets for $2,090 per unit and supply 1,000 mini-bars for the coming years estimated production. If the company accepts this offer and shuts down production of this part of the business, production workers and supervisors will be reassigned to other areas. Assume that for the short-term decision-making process demonstrated in this problem, the companys total labor costs (direct labor and supervisor salaries) will remain the same if the bar inserts are purchased.

   The specialized equipment cannot be used and has no market value. However, the space occupied by the mini-bar production can be used by a different production group that will lease it for $55,000 per year.

   A. Calculate the differential cost of mini-bar insert. If an amount box does not require an entry, leave it blank.

   	Cost of Making 1,000 Bar Inserts	Cost of Buying 1,000 Bar Inserts	Differential Cost (Savings)
   Variable Costs
   Direct material	$fill in the blank 1	$fill in the blank 2	$fill in the blank 3
   Direct labor	fill in the blank 4	fill in the blank 5	fill in the blank 6
   Variable overhead	fill in the blank 7	fill in the blank 8	fill in the blank 9
   	$fill in the blank 10	$fill in the blank 11	$fill in the blank 12
   Fixed Costs
   Equipment depreciation	$fill in the blank 13	$fill in the blank 14	$fill in the blank 15
   Building depreciation	fill in the blank 16	fill in the blank 17	fill in the blank 18
   Supervisor salaries	fill in the blank 19	fill in the blank 20	fill in the blank 21
   	$fill in the blank 22	$fill in the blank 23	$fill in the blank 24
   Other Cost Savings
   Leased space	$fill in the blank 25	$fill in the blank 26	$fill in the blank 27
   Cost of buying bar inserts	fill in the blank 28	fill in the blank 29	fill in the blank 30
   	$fill in the blank 31	$fill in the blank 32	$fill in the blank 33
   Total cost	$fill in the blank 34	$fill in the blank 35	$fill in the blank 36

   B. Should the company make or buy the mini-bar insert?

   MakeBuy