Exercise $4-38($Static$)$ Make$-$or$-$Buy Decisions $($LO $4-4)$

Coram Audio makes wireless headphones. Each pair of headphones comes with a travel case. Since its founding, Coram has

manufactured its own travel cases. Recently, Holmur Travel Gear $($HTG$),$ a local outfitter that manufactures and sells backpacks, tent

cases, and so on$,$ contacted Coram and proposed that they produce the headphone travel cases. Based on management experience,

Coram's cost per travel case is as follows $($based on annual production of $40,000$ units$).$

HTG has offered to sell the case to Coram for $$39$ each. The total order would amount to $40,000$ travel cases per year. Coram's

management decides that they will make the switch to HTG cases if Coram can save at least $$12,000$ per year. Accepting the offer

would eliminate annual fixed overhead of $$76,000.$

Required:

a$.$ Prepare a schedule that shows the total differential costs.

b$.$ Should Coram continue to make the travel cases or buy them from HTG$?$Complete this question by entering your answers in the tabs below.

Prepare a schedule that shows the total differential costs. $($Select option "higher" or "lower", keeping Status Quo as the base.

Select "none" if there is no effect.$)$