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				$280,000
Aluminum tubing				96,000
Frame fittings				24,000
Direct labor				162,000
Variable manufacturing overhead				30,000
Fixed manufacturing overhead				152,000

Dustin Company, a specialty fabricator of synthetic materials, can make the needed tops of comparable quality for $415 each, F.O.B. shipping point. Allen would furnish its own trademark insignia at a unit cost of $16. Transportation in would be $28 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 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 purchase tops:		$Answer
Costs avoided by purchasing tops:
Direct materials	$Answer
Direct labor	Answer
Variable manufacturing overhead	Answer
Fixed manufacturing overhead	Answer	Answer
Net advantage (disadvantage) to purchase alternative		$Answer

b. Assuming that the production capacity released by purchasing the tops could be devoted to a subcontracting job for another company that netted a contribution margin of $43,600, what maximum purchase price could Allen Corporation pay for the tops?

Round answer to two decimal places, if applicable.

$Answer