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Flip Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for Flip for $270 each. Flip needs 1,500

Flip Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for Flip for $270 each. Flip needs 1,500 clocks annually. Flip has provided the following unit costs for its commercial clocks:

Direct materials $100

Direct labor 110

Variable overhead 30

Fixed overhead (70% avoidable) 150

Instructions: Prepare an incremental analysis which shows the effect of the make-or-buy decision.

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