Maplewood Company must decide whether to make or buy some of its components. The costs of producing 60,100 switches for its generators are as follows.

Direct materials		$29,449		Variable overhead		$60,100
Direct labour		42,671		Fixed overhead		59,499

Instead of making the switches at an average cost of $3.19 ($191,719 60,100), the company has an opportunity to buy the switches at $2.99 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).)

Maplewood Company must decide whether to make or buy some of its components. The costs of producing 60,100 switches for its generators are as follows. Direct materials Direct labour $29,449 42,671 Variable overhead Fixed overhead $60,100 59,499 Instead of making the switches at an average cost of $3.19 ($191,719 - 60,100), the company has an opportunity to buy the switches at $2.99 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated. (a) Your answer is partially correct. Try again. 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.) Net Income Increase (Decrease) Per Unit Make Buy Number of units: 60,100 Variable manufacturing costs 2.20 132,220 132,220 Fixed manufacturing costs 0.99 59,499 44,401 15,098 Purchase price 2.99 179,699 -179,699 Total annual cost 191719 224,100 -32,381 The company should make the components