Somerset Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $60 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 44% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows:

Direct materials $26

Direct labor 20

Factory overhead (44% of direct labor) 8.8

Total cost per unit $54.8

If Somerset 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.

Question Content Area

a. Prepare a differential analysis dated April 30 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. If required, round your answers to two decimal places. If an amount is zero, enter "0".

Differential Analysis

Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2)

April 30

Make

Carrying

Case

(Alternative 1) Buy

Carrying

Case

(Alternative 2)

Differential

Effects

(Alternative 2)

Unit costs:

Purchase price $fill in the blank 15968af5506206f_1

$fill in the blank 15968af5506206f_2

$fill in the blank 15968af5506206f_3

Direct materials fill in the blank 15968af5506206f_4

fill in the blank 15968af5506206f_5

fill in the blank 15968af5506206f_6

Direct labor fill in the blank 15968af5506206f_7

fill in the blank 15968af5506206f_8

fill in the blank 15968af5506206f_9

Variable factory overhead fill in the blank 15968af5506206f_10

fill in the blank 15968af5506206f_11

fill in the blank 15968af5506206f_12

Fixed factory overhead fill in the blank 15968af5506206f_13

fill in the blank 15968af5506206f_14

fill in the blank 15968af5506206f_15

Total unit costs $fill in the blank 15968af5506206f_16

$fill in the blank 15968af5506206f_17

$fill in the blank 15968af5506206f_18

Question Content Area

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.

Maitede-Bur Decision 15.1 of the trect labor casts. twe decimal piaces. If an amoutit if two, enter " Q4. b. Assumany there were no better atiernative uses for the spare cajacity, if would to manufacture the carrying cases. Fixed factory overtead is this decisen