Make-orBuy Decision Companion Technologies Company has been purchasing carrying cases for its portable tablets at a delivered cost of 559 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 33% of direct labor cost. The total unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $2300 Direct labor 2200 Factory overhead (35% of direct labor) 336 Total cost per unit $5336 ) If Companion Technologies Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 14% of the direct labor costs. a. Prepare a differential analysis report for the makerorsbuy decision. Enter your final answer as a positive amount if it represents a net cost savings; enter a negative amount if it represents an increase in cost. COMPANION TECHNOLOGIES COMPANY Make or Buy Carrying Case 'fferential Analysis Report Purchase prlce of carrying case $:] Differential cost to manufacture carrying case: Direct materials $:] Direct labor :1 Variable factory overhead :1 :1 C st savings from manufactu gcarry 9 case v of $:] a. Prepare a differential analysis report for the make-or-buy decision, considering the differential revenues and costs. WISCONSIN ARTS OF MILWAUKEE Purchase Outside Page Layout Services Differential Analysis Report Differential revenue: Residual value of computer equipment Differential cost of alternatives: Purchase price of layout work: Number of pages Price per page * $ Total differential costs Cost to perform internally: Salaries Benefits Supplies Office expenses Cost increase from purchasing outside layout services Net differential loss from using an outside serviceMake-orBuy Decision Wisconsin Arts of Milwaukee employs ve people in its Publication Department. These people lay out pages for pamphlets, brochures, and other publications for the production. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service is quoting a price of$1700 per layout page. The budget for the Publication Department is as follows: Salaries $100,000 Benets 53,000 Supplies 35,000 Office expenses 20,000 Office depreciation 44,500 Computer depreciation 29,700 ) Total $362 200 The department expects to lay out 29,100 pages. The computers used by the department have an estimated residual value of $19,000. The Publication Department office space would be used for future administrative needs if the department's function were purchased from the outside. Machine Replacement Decision Creekside Products Inc. is considering replacing an old piece of machinery, which cost $1, 128,000 and has $661,000 of accumulated depreciation to date, with a new machine that costs $847,800. The old machine could be sold for $133,800. The annual variable production costs associated with the old machine are estimated to be $386,100 for six years. The annual variable production costs for the new machine are estimated to be $254,800 for six years. a. Determine the total and annualized differential income or loss anticipated from replacing the old machine. Net differential income Annual differential income b. What is the sunk cost in this situation? the book value of the present equipment. Feedback Check My Work a. Follow Exhibit 9 in the text. Determine the costs to continue with the old machine with the old machine for eight years at the current amount. Determine the costs with the replacement machine. Determine the effect of the purchase price of the replacement and the sale proceeds of the old machine. b. Remember that the book value of the old equipment is a sunk cost