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Old Camp Company manufactures awnings for its own line of tents. The company is curently operating at capacity and has received an offer from one
Old Camp Company manufactures awnings for its own line of tents. The company is curently operating at capacity and has received an offer from one of its suppliers to make the 12,000 awnings it needs for $22 each. Old Camp's costs to make the awning are $11 in direct materials and $6 in direct labor. Variable manufacturing overhead is 80 percent of direct labor. If Old Camp accepts the offer Required 1. Complete the incremental analysis for the decision to make or buy the awnings in the table provided below Net l Make Buy Increase (Decrease) Direct Materials Direct Labor Variable OH Fixed OH Purchase Price Total 2. Should Old Camp continue to manufacture the awnings or should they purchase the awnings from the supplier? Manufacture O Purchase 3. Assuming that the capacity released by purchasing the awnings allowed Old Camp to record a profit of $22.000, should Old Camp continue to manufacture or purchase the awnings? Manufacture O Purchase
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