Sunland Company must decide whether to make or buy some of its components. The costs of producing $67,200$ switches for its generators are as follows.

Direct materials $$31,000,$ Variable overhead $$44,900$

Direct labor

$$44,484$

Fixed overhead

$$79,200$

Instead of making the switches at an average cost of $$2\mathrm{.}97($$$199,58467,200),$ the company has an opportunity to buy the switches at $$2\mathrm{.}75$ per unit. If the company purchases the switches, all the variable costs and one$-$fourth of the fixed costs will be eliminated.

$($a$)$

Your answer is partially correct.

Prepare an incremental analysis showing whether the company should make or buy the switches. $($Enter negative amounts using either a negative sign preceding the number e$.$g$.-45$ or parentheses e$.$g$.(45).)$

Direct

materials

Direct labor

Variable

manufacturing

costs

Fixed

manufacturing

costs

Purchase

price

Total cost

Net I

Buy

Increase

$