Danielson Corporation currently manufactures $3,000$ speakers annually for its main product. The costs per speaker are as follows:

Direct materials

$ $3$

Direct labor

$7$

Variable overhead

$4$

Fixed overhead

$7$

Total

$$21$

Hunter Company has contacted Danielson with an offer to sell it $3,000$ speakers for $$18$ each. $$5$ of the fixed overhead per unit is unavoidable.

Instructions

Prepare an incremental analysis for the make$-$or$-$buy decision.