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). Direct materials Direct labor Variable overhead Fixed overhead Total $ 10.00 21.20 6.40 4.70 $ 42.30 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. Required A Required B 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.) Status Quo Alternative Difference HTG's offer 1,677,000 $ 1,677,000 higher Materials 430,000 0 430,000 lower Labor 911,600 0 9,116,000 lower 0 Variable overhead 275,200 0 275,200 lower Fixed overhead applied 202,100 120,400 81,700 lower Total costs 1,818,900 21,500lower Required B > *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. 1,797,400 Required A