Fuddu Company must decide whether to make or buy some of its components. The costs of producing 59,600 switches for its generators are as follows.

Direct materials		$30,396		Variable overhead		$47,680
Direct labour		42,912		Fixed overhead		57,216

Instead of making the switches at an average cost of $2.99 ($178,204 59,600), the company has an opportunity to buy the switches at $2.79 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated.

(a)

Prepare an incremental analysis showing whether the company should make or buy the switches. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).)

				Per Unit		Make		Buy		Net Income Increase (Decrease)
Number of units:		enter a number of units
select an item Cost of good soldFixed manufacturing costsTotal annual costVariable manufacturing costsPurchase priceManufacturing overhead				$enter a dollar amount rounded to 2 decimal places		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an item Fixed manufacturing costsCost of good soldManufacturing overheadVariable manufacturing costsTotal annual costPurchase price				enter a dollar amount rounded to 2 decimal places		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Variable manufacturing costsTotal annual costCost of good soldFixed manufacturing costsPurchase priceManufacturing overhead				enter a dollar amount rounded to 2 decimal places		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a closing name Manufacturing overheadCost of good soldTotal annual costVariable manufacturing costsPurchase priceFixed manufacturing costs						$enter a total amount		$enter a total amount		$enter a total amount

The company should select an option makebuy the components.