Make or Buy Harper Company incurs a total cost of $270,000 in producing 22,000 units of a component needed in the assembly of its major product. The component can be purchased from an outside supplier for $6 per unit. A related cost study indicates that the total cost of the component includes fixed costs equal to 80% of the variable costs involved.

a. Should Harper buy the component if it cannot otherwise use the released capacity? Present your answer in the form of differential analysis.

Use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers.

Cost from outside supplier	$Answer
Variable costs avoided by purchasing	Answer
Net advantage (disadvantage) to purchase alternative	$Answer

b. What would be your answer to requirement (a) if the released capacity could be used in a project that would generate $19,000 of contribution margin?

Use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers.

Cost from outside supplier	$Answer
Variable costs avoided by purchasing	Answer
Contribution margin generated by new project	Answer
Net advantage (disadvantage) to purchase alternative	$Answer

CLICK HERE TO REVIEW LEARNING OBJECTIVES QUESTION 3 Not complete Points out of 200 Flag question Make or Buy Harper Company incurs a total cost of $270,000 in producing 22,000 units of a component needed in the assembly of its major product. The component can be purchased from an outside supplier for $6 per unit. A related cost study indicates that the total cost of the component includes fixed costs equal to 80% of the variable costs involved. a. Should Harper buy the component if it cannot otherwise use the released capacity? Present your answer in the form of differential analysis. Use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers. Cost from outside supplier Variable costs avoided by purchasing Net advantage (disadvantage) to purchase alternative5 b. What would be your answer to requirement (a) if the released capacity could be used in a project that would generate $19,000 of contribution margin? Use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers. Cost from outside supplier Variable costs avoided by purchasing Contribution margin generated by new project Net advantage (disadvantage) to purchase alternative Check