Maplewood Company must decide whether to make or buy some of its components. The costs of producing 59,600 switches for its generators are as follows.

Direct materials		$30,396		Variable overhead		$47,680
Direct labour		42,912		Fixed overhead		57,216

Instead of making the switches at an average cost of $2.99 ($178,204 59,600), the company has an opportunity to buy the switches at $2.79 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated.

Prepare an incremental analysis showing whether the company should make or buy the switches. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).)

				Per Unit		Make		Buy		Net Income Increase (Decrease)
Number of units:

			$		$		$		$

$

$

$

The company should

the components.

Would your answer be different if the released productive capacity will generate additional income of $28,924? If the released capacity can generate additional income of $28,924, then the company should

the components.