Maplewood Company must decide whether to make or buy some of its components. The costs of producing 59,100 switches for its generators are as follows.

Direct materials		$28,959		Variable overhead		$40,779
Direct labour		41,961		Fixed overhead		60,282

Instead of making the switches at an average cost of $2.91 ($171,981 59,100), the company has an opportunity to buy the switches at $2.71 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated.

(a)

Partially correct answer icon

Your answer is partially correct.

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:		enter a number of units
select an item Purchase priceVariable manufacturing costsFixed manufacturing costsCost of good soldTotal annual costManufacturing overhead				$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an item Manufacturing overheadVariable manufacturing costsPurchase priceTotal annual costCost of good soldFixed manufacturing costs				enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Fixed manufacturing costsCost of good soldTotal annual costManufacturing overheadVariable manufacturing costsPurchase price				enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Cost of good soldTotal annual costVariable manufacturing costsPurchase priceManufacturing overheadFixed manufacturing costs						$enter a total amount		$enter a total amount		$enter a total amount

The company should select an option buymake the components.