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Question 5 Maplewood Company must decide whether to make or buy some of its components. The costs of producing 59,000 switches for its generators are
Question 5 Maplewood Company must decide whether to make or buy some of its components. The costs of producing 59,000 switches for its generators are as follows. Direct materials Direct labour $30,090 40,710 Variable overhead Fixed overhead $40,120 63,720 Instead of making the switches at an average cost of $2.96 ($174,640 = 59,000), the company has an opportunity to buy the switches at $2.76 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated. (a) 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: $ The company should the components
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