Ch20 Q5/12

Innova uses 1,000 units of the component IMC2 every month to manufacture one of its products. The unit costs incurred to manufacture the component are as follows. Overhead costs include variable material handling costs of $7.50, which are applied to products on the basis of direct material costs. The remainder of the overhead costs are applied on the basis of direct labor dollars and consist of 60.00% variable costs and 40.00% foxed costs. Avender has offered to supply the IMC2 component at a price of $210.00 per unit. (a) Prepare the incremental analysis for the decision to make or buy IMC2. Assume that no fixed costs will be eliminated if production is outsourced. (Round answers to 2 decimal ploces, es 12.25. Enter negative amounts using either a negotive sign preceding the number eg -45 or porentheses es (45), or parentheses es. (45)) Should Innova purchase the component from the outside vendor if Innova's unused fachities remain ide