Make or Buy Decision Somerset Comporter Company has been purchasing carrying cases for its portable computers at a purchase price of 324 per unit The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 40% af direct labor cost. The unit costs to produce comparable carrying cases are expected to be as Direct materials Direct Inbor $8.00 12.00 Factory overhead (40% of direct isbor) 4.80 $24.80 Total cost per unit Janatae fact company manufactures the carrying cases, fixed factory overhead costs wit not increase and variable factory overhead costs associated with the Question Content Area are expected to be 25% of the direct labor costs. a. Prepare a differential analys dated April 30 to determine whether the company should make (Alternative 1) or boy (Alternative 2) the carrying case. If an amount is zero, enter "0". If required, round your answers to two decimal places. Differential Analysis Make Carrying Case (Aft. 1) or Buy Carrying Case (Alt. 2) Unit costs: Purchase price Direct materials Direct labor Variable factory overhead Fixed factory overhead Total Make Carrying Case (Alternative 1) April 30 Buy Carrying Case Differential Effects (Alternative 2) (Alternative 2) unit costs Question Content Area b. Assuming there were no better alternative uses for the spare capacity, it would to manufacture the carrying cases. Fixed factory overhead is to this decision. Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $400,000 and has $175,000 of accumulate depreciation to date, with a new machine that has a purchase price of $550,000. The old machine could be sold for $250,000. The annual variable production costs associated with the old machine are estimated to be $72,500 per ye for eight years. The annual variable production costs for the new machine are estimated to be $24,000 per year for eight years. Question Content Area a.1 Prepare a differential analysis dated May 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Continue with Old Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) Machine May 29 Replace Old Machine (Alternative 1) (Alternative 2) Differential Effects (Alternative 2) Revenues: Proceeds from sale of old machine Costs: Purchase price Variable production costs (8 years) Profit (Loss) LL