$$Make or Buy Allen Corporation currently makes the nylon convertible top for its main product, a fi$-$

berglass boat designed especially for water skiing. The costs of producing the $1,500$ tops needed each

year follow:

Dustin Company, a specialty fabricator of synthetic materials, can make the needed tops of comparable

quality for $$390$ each, F$.$O$.$B$.$ shipping point. Allen would furnish its own trademark insignia at a unit

cost of $$12.$ Transportation would be $$18$ per unit, paid by Allen Corporation.

Allen's chief accountant has prepared a cost analysis that shows that only $20\%$ of fixed overhead

could be avoided if the tops are purchased. The tops have been made in a remote section of Allen's fac$-$

tory building, using equipment for which no alternate use is apparent in the foreseeable future.

Prepare a Make or Buy Worksheet. Follow this set $-$up$.$

Cost to purchase tops:

Cost avoided by purchasing the tops:

Advantage or disadvantage of purchasing

Check figures: Total costs avoided, $$618,000$; Per unit purchase price,

$$420.$