Pharoah Company must decide whether to make or buy some of its components. The costs of producing 63,800 switches for its generators are as follows.
				Direct materials	$29,300	Variable overhead	$44,200
Direct labor	$30,634	Fixed overhead	$82,800
Instead of making the switches at an average cost of $2.93 ($186,934 63,800), the company has an opportunity to buy the switches at $2.74 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated.
				Prepare an incremental analysis showing whether the company should make or buy the switches.
	Make	Buy	Net Income Increase/Decrease
Direct materials	29300	0	29300
Diret Labor	30634	0	30634
Variable manufacturing costs	44200	0	44200
p;urchase price	82800	62100	20700
total cost	0	174812	-174812
	186934	236912	-49978
pharoah company will incur $		_________________
of Additional cost if it	49978	Buys	the switches
Would your answer be different if the released productive capacity will generate additional income of $53,668? (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
					Make	Buy	Net Income Increase/Decrease
total Cost	$	$	$
Opportunity Cost
total Cost	$	$	$
(Yes/No)	The Answer is	(Different/The Same)
The analysis shows that net income will be		(Decresed/Increased)
	by	$