Question
Make-or-Buy Decision Matchless Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $62 per unit. The company, which
Make-or-Buy Decision Matchless Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $62 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 39% of direct labor cost. The total unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $25.00 Direct labor 21.00 Factory overhead (39% of direct labor) 8.19 Total cost per unit $54.19 If Matchless Computer 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 15% of the direct labor costs. Question Content Area a. Prepare a differential analysis dated February 24 to determine whether the company should Make Carrying Case (Alternative 1) or Buy Carrying Case (Alternative 2). If required, round your answers to two decimal places. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2) February 24 Make Carrying Case (Alternative 1) Buy Carrying Case (Alternative 2) Differential Effects (Alternative 2) Unit costs: Purchase price $fill in the blank ef5f2a004fd1fd3_1 $fill in the blank ef5f2a004fd1fd3_2 $fill in the blank ef5f2a004fd1fd3_3 Direct materials per unit fill in the blank ef5f2a004fd1fd3_4 fill in the blank ef5f2a004fd1fd3_5 fill in the blank ef5f2a004fd1fd3_6 Direct labor per unit fill in the blank ef5f2a004fd1fd3_7 fill in the blank ef5f2a004fd1fd3_8 fill in the blank ef5f2a004fd1fd3_9 Variable factory overhead per unit fill in the blank ef5f2a004fd1fd3_10 fill in the blank ef5f2a004fd1fd3_11 fill in the blank ef5f2a004fd1fd3_12 Fixed factory overhead per unit fill in the blank ef5f2a004fd1fd3_13 fill in the blank ef5f2a004fd1fd3_14 fill in the blank ef5f2a004fd1fd3_15 Total unit costs $fill in the blank ef5f2a004fd1fd3_16 $fill in the blank ef5f2a004fd1fd3_17 $fill in the blank ef5f2a004fd1fd3_18 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.
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