Companion Technologies Company has been purchasing carrying cases for its portable tablets at a delivered cost of $61 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 42% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be as follows:

Direct materials	$25.00
Direct labor	22.00
Factory overhead (42% of direct labor)	9.24
Total cost per unit	$56.24

If Companion Technologies Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 15% of the direct labor costs.

Question Content Area

a. Prepare a differential analysis report for the make-or-buy decision. Enter your final answer as a positive amount if it represents a net cost savings; enter a negative amount if it represents an increase in cost.

COMPANION TECHNOLOGIES COMPANY Manufacture Carrying Case Differential Analysis Report

Purchase price of carrying case		$fill in the blank 8ba427ff9fa406d_1
Differential cost to manufacture carrying case:
Direct materials	$fill in the blank 8ba427ff9fa406d_2
Direct labor	fill in the blank 8ba427ff9fa406d_3
Variable factory overhead	fill in the blank 8ba427ff9fa406d_4	fill in the blank 8ba427ff9fa406d_5
Cost increase from manufacturing carrying caseCost savings from manufacturing carrying case		$- Select -

Question Content Area

b. On the basis of the data presented, would it be advisable to make the carrying cases or to continue buying them? It would be advisable

continue buyingto manufacture

the carrying cases because the

cost savingsadditional costs

would be $fill in the blank 5bea3cf36f8f055_3 per unit. Fixed factory overhead is

relevantirrelevant

since it will continue

whether the carrying cases are purchased or manufacturedonly if the carrying cases are purchasedonly if the carrying cases are manufactured

.