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Make or Buy Walsh Corporation currently makes the nylon mooring cover for its main product, a fiberglass boat designed for tournament bass fishing. The costs
Make or Buy Walsh Corporation currently makes the nylon mooring cover for its main product, a fiberglass boat designed for tournament bass fishing. The costs of producing the 2,000 covers needed each year follow Nylon fabric Wood battens Brass fittings Direct labor Variable manufacturing overhead Fixed manufacturing overheac $335,000 64,000 32,000 128,000 96,000 160,000 Calvin Company, a specialty fabricator of synthetic materials, can make the needed covers of comparable quality for $335 each, F.O.B. shipping point. Walsh would furnish its own trademark insignia at a unit cost of $20. Transportation in would be $16 per unit, paid by Walsh Corporation Walsh's chief accountant has prepared a cost analysis that shows that only 30% of fixed overhead could be avoided if the covers are purchased. The covers have been made in a remote section of Walsh'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 mooring covers be purchased from Calvin 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 covers: Costs avoided by purchasing covers Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overheac Net advantage (disadvantage) to purchase alternative
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