Staples must decide whether to make or buy some of its components. The costs of producing 60,000 switches are:

Direct materials		$30,000		Variable overhead		$45,000
Direct labour		42,000		Fixed overhead		63,000

Instead of making the switches at an average cost of $3.00 ($180,000 60,000), staples has an opportunity to buy the switches at $2.80 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated.

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).)

				Per Unit		Make		Buy		Net Income Increase (Decrease)
Number of units:		enter a number of units here
select an item Purchase price, Total annual cost, Manufacturing overhead, Variable manufacturing costs, Cost of good sold, or Fixed manufacturing costs				$enter a dollar amount rounded to 2 decimal places		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an item Fixed manufacturing costs, Variable manufacturing costs, Cost of good sold, Total annual cost, Purchase price, or Manufacturing overhead				enter a dollar amount rounded to 2 decimal places		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Cost of good sold, Variable manufacturing costs, Total annual cost, Fixed manufacturing costs, Purchase price, or Manufacturing overhead				enter a dollar amount rounded to 2 decimal places		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a closing name Cost of good sold, Manufacturing overhead, Total annual cost, Purchase price, Fixed manufacturing costs, or Variable manufacturing costs						$enter a total amount		$enter a total amount		$enter a total amount

The company should make or buy the components? ____

Would your answer be different if the released productive capacity would generate an additional income of $31,800?

If the released capacity can generate an additional income of $31,800, then the company should purchase or make

the components?_________

show calculations below