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Make or Buy Allen Corporation currently makes the nylon convertible top for its main product. a fiberglass boat designed especially for water skiing. The costs

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Make or Buy Allen Corporation currently makes the nylon convertible top for its main product. a fiberglass boat designed especially for water skiing. The costs of producing the 1,500 tops needed each year follow: Nylon fabric $270,000 Aluminum tubing 96,000 Frame ttings 24,000 Direct labor 162,000 Variable manufacturing overhead 30,000 Fixed manufacturing overhead 180,000 Dustin Company, a specialty fabricator of synthetic materials, can make the needed tops of comparable quality for $390 each, F.0.B. shipping point Allen would furnish its own trademark insignia at a unit cost of $12. Transportation in would be $18 per unit. paid by Allen Corporation Allen's chief accountant has prepared a cost analysis that shows that only 20% ofxed overhead could be avoided if the tops are purchased. The tops have been made in a remote section of Allen's factory building, using equipment for which no alternate use is apparent in the foreseeable future. a. Prepare a differential analysis showing whether or not you would recommend that the convertible tops be purchased from Dustin Company. If appropriate, use a negative sign with your answer to represent a net disadvantage answer. Do not use negative signs with any other answers. Make or Buy Differential Analysis Cost to purchasetops: 5 Costs avoided by purchasingtops: Direct materials 5 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Net adva ntage (disa dvantageJto purchase alternative $ b. Assuming that the production capacity released by purchasing the tops could be devoted to a subcontractingjob for another company that netted a contribution margin of $42,000, what maximum purchase price could Allen Corporation pay for the tops? Round answer to two decimal places, if applicable. $

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