Sapphire Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $89 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 40% of direct labor cost. The total unit costs to produce comparable carrying cases are expected to be as follows:

Direct materials	$53.00
Direct labor	26.00
Factory overhead (40% of direct labor)	10.40
Total cost per unit	$89.40

If Sapphire Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 15% of the direct labor costs.

1. a. Prepare a differential analysis dated February 24 to determine whether the company should Make Carrying Case (Alternative 1) or Buy Carrying Case (Alternative 2). If an amount is zero, enter "0". If required, round your answers to two decimal places. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

   Differential Analysis
   Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2)
   February 24
   	Make Carrying Case (Alternative 1)	Buy Carrying Case (Alternative 2)	Differential Effects (Alternative 2)
   Unit costs:
   Purchase price
   Direct materials per unit
   Direct labor per unit
   Variable factory overhead per unit
   Fixed factory overhead per unit
   Total unit costs

   b. Assuming there were no better alternative uses for the spare capacity, it would to manufacture the carrying cases. Fixed factory overhead is ____ to this decision.