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Make or Buy Decision Matchless Computer Company has been purchasing carrying cases for its portable ers at a delivered cost of S55 per unit. The
Make or Buy Decision Matchless Computer Company has been purchasing carrying cases for its portable ers at a delivered cost of S55 per unit. The company, which is currently opera full capacity, charges factory overhead to production at the rate of 40% of direct labor cost. The fully absorbed unit cos to be as follows: ts to produce comparable carrying cases are expected Direct materials Direct labor Factory overhead (40% of direct labor) Total cost per unit $28.00 20.00 8.00 $56.00 If Matchless Computer Company nufactures the carrying cases, ixed fac head costs will not increase factory overh are expected to be 15% of the direct labor costs. a. Prepare a differential analysis, dated October 11, 2012, to determine whether the ase and variable factory overhead costs associated with the cases should make (Alternative 1) or buy (Alternative 2) the carrying case. b.On the basis of the clata presented, would it be advisable to make the cary- ing cases or to continue buying them? Explain
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