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DO IT! 23.3 (LO 3) Wilma Company must decide whether to make or buy some of its components. The costs of producing 60,000 switches for

DO IT! 23.3 (LO 3) Wilma Company must decide whether to make or buy some of its components. The costs of producing 60,000 switches for its generators are as follows. Direct materials Direct labor $30,000 $42,000 Variable overhead Fixed overhead $45,000 $60,000 Instead of making the switches at an average cost of $2.95 ($177,000 60,000), the company has an opportunity to buy the switches at $2.70 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated. (a) Prepare an incremental anal- ysis showing whether the company should make or buy the switches. (b) Would your answer be dif- ferent if the released productive capacity will generate additional income of $34,000

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