Make$-$or$-$Buy Decision

factory overhead to production at the rate of $40\%$ of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows:

of the direct labor costs.

required, round your answers to two decimal places.

Differential Analysis

Make $($Alt$.1)$ or Buy $($Alt$.2)$ Carrying Case

May $31$

Line Item Description

Unit costs:

Purchase price

Direct materials

Direct labor

Variable factory overhead

Fixed factory overhead

Total unit costs

Make Carrying Case

$($Alternative $1)$

Buy Carrying Case

$($Alternative $2)$

Differential Effects

$($Alternative $2)$

$

$

$

b$.$ Assuming there were no better alternative uses for the spare capacity, it would

decision.