CLICK HERE TO REMEW LEARNING OBJECTIVES QUESTION 5 Partially correct Mark 7.00 out of 8.00 pFlag question Make or Buy Walsh Corporation currently makes the nylon mooring cover for its main product, a fiberglass boat designed for tournament bass fishing. The costs of producing the 2,000 covers needed each year follow: Nylon fabric Wood battens Brass fittings Direct labor Variable manufacturing overhead Fixed manufacturing overhead $340,000 64,000 32,000 128,000 96,000 160,000 Calvin Company, a specialty fabricator of synthetic materials, can make the needed covers of comparable quality for $340 each, F.O.B. shipping point. Walsh would furnish its own trademark insignia at a unit cost of $20. Transportation in would be $16 per unit, paid by Walsh Corporation Walsh's chief accountant has prepared a cost analysis that shows that only 30% of fixed overhead could be avoided if the covers are purchased. The covers have been made in a remote section of Walsh's factory building, using equipment for which no alternate use is apparent in the foreseeable future a. Prepare a differential analysis showing whether or not you would recommend that the mooring covers be purchased from Calvin Company If appropriate, use a negative sign with your answer to represent a net disadvantage answer. Do not use negative signs with any other answers. Make or Buy Differential Analysis 752,000 Cost to purchase covers Costs avoided by purchasing covers: Direct materials 436,000 128,000 96,000 48,000 Direct labor Variable manufacturing overhead Fixed manufacturing overhead 708,000