Crane company must decide whether to make or buy some of its components. The cost of producing 62,500 switches for its generators are as follows.

Direct materials $30,700 Variable overhead $45,800

Direct labor $21,150 Fixed overhead $83,600

Instead of making the switches at an average cost of $2.90 ($181,250/62,500) the company has an opportunity to buy the switches at $2.72 per unit. If the company purchases the switches, all of the variable costs and one fourth of the fixed costs will be eliminated.

Would your answer be different if the released productive capacity will generate additional income of $55,470? (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Make Buy Increase (Decrease) Total Cost $ $ $ Opportunity cost Total cost $ $ $ V , the answer is v . The analysis shows that net income will be V by $