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Jupiter Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $89 per unit. The company, which is currently
Jupiter Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $89 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 60 % of direct labor cost. The fully absorbed unit costs to produce comparable carrying case ses are expected to be as follows: Direct materials $59 Direct labor 20 Factory overhead (60 % of direct labor) 12 $91 Total cost per unit If Jupiter Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 10% of the direct labor costs Required: A. Prepare a differential analysis, dated July 19 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "O". A colon () will automatically appear if required. B On the basis of the data presented, would it be advisable to make the carrying cases or to continue buying them? Explain Labels Cash flows from investing activities Costs Amount Descriptions Direct materials per unit Direct labor per unit Fixed factory overhead per unit Gain on sale of investments Income (Loss) Loss on sale of investments Purchase price Variable factory overhead per unit A. Prepare a differential analysis, dated July 19 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers a minus sign. If there is no amount or an amount is zero, enter "O". A colon () will automatically appear if required use Differential Analysis Make Carrying Case (Alternative 1) or Buy Carrying Case (Alternative 2) July 19 Make Carrying Differential Effect Buy Carrying Case 1 Case on Income (Alternative 2) (Alternative 1) (Alternative 2) (Label) Purchase price $000 4. Direct materials per unit (59.00) 0.00 59.00 Variable factory overhead per unit 6 Direct labor per unit Fixed factory overhead per unit 8 Income (Loss)
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