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Grouper Company must decide whether to make or buy some of it's components. I can't figure out what I'm missing and how to get it.
Grouper Company must decide whether to make or buy some of it's components.
I can't figure out what I'm missing and how to get it. Can you explain?
comment "did not mention if any fixed cost is avoidable when the released capacity is used to generate additional income" the question does not say. I've send the entire screen.
Grouper Company must decide whether to make or buy some of its components. The costs of producing 61,300 switches for its generators are as follows. Direct materials $30,100 Variable overhead $44,600 Direct labor $26,670 Fixed overhead $76,400 Prepare an incremental analysis showing whether the company should make or buy the switches. (If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses eg. (45).) Make Buy Net Income Increase (Decrease) 30100 Direct materials 30100 Direct labor 26670 26670 Variable manufacturing costs 44600 44600 Fixed manufacturing costs 76400 Purchase price 166736 Total cost 177770 $ Grouper Company will incur $ of additional costs if it buys the switches. Would your answer be different if the released productive capacity will generate additional income of $50,176? (If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase (Decrease) Make Buy Total Cost $ Opportunity cost Total cost Yes the answer is different . The analysis shows that net income will be increased by $Step by Step Solution
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