View Policies Current Attempt in Progress Wildhorse Company must decide whether to make or buy some of its components. The costs of producing 68,900 switches for its generators are as follows. Direct materials Direct labor $30,200 $46,455 Variable overhead Fixed overhead $44,600 $82,000 Instead of making the switches at an average cost of $2.95 ($203,255 = 68,900), the company has an opportunity to buy the switches at $2.66 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated. (a) 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).) Net Income Increase (Decrease) Make Buy Direct materials $ $ Direct labor Variable overhead Fixed overhead Purchase price Total cost $ $ $ Wildhorse Company will incur $ of additional costs if it the switches. e Textbook and Media Save for Later Attempts: 0 of 3 used Submit Answer Anna Garden recently opened her own basketweaving studio. She sells finished baskets in addition to selling the raw materials needed by customers to weave baskets of their own. Unfortunately, owing to space limitations, Anna is unable to carry all varieties of kits originally assembled and must choose between two basic packages. The Basic Kit includes undyed, uncut reeds (with dye included) for weaving one basket. This basic package costs Anna $8 and sells for $22. The second kit, called Stage 2, includes cut reeds that have already been dyed. With this kit the customer need only soak the reeds and weave the basket. Anna produces the Stage 2 kit by using the materials included in the Basic Kit. Because she is more efficient at cutting and dying reeds than her average customer, Anna is able to produce two Stage 2 kits in one hour from one Basic Kit. (She values her time at $26 per hour.) The Stage 2 kit sells for $36. (a1) Prepare an incremental analysis for the Anna's basketweaving studio. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Sell (Basic Kit) Process Further (Two Stage 2 Kits) Net Income Increase (Decrease) Sales per unit $ $ $ Costs per unit Direct materials $ $ $ Direct labor Total $ $ $ Net income per unit $ $ $ e Textbook and Media Save for Later Attempts: 0 of 3 used Submit Answer Current Attempt in Progress Cullumber Enterprises uses a computer to handle its sales invoices. Lately, business has been so good that it takes an extra 3 hours per night, plus every third Saturday, to keep up with the volume of sales invoices. Management is considering updating its computer with a faster model that would eliminate all of the overtime processing. New Machine $25,400 Original purchase cost Accumulated depreciation Estimated annual operating costs Remaining useful life Current Machine $15,100 $6,500 $24,600 5 years $20,000 5 years If sold now, the current machine would have a salvage value of $13,400. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after 5 years. Prepare an incremental analysis to determine whether the current machine should be replaced. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) positive amounts and eases as negative amounts. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Retain Machine Replace Machine Net Income Increase (Decrease) Operating costs $ $ $ New machine cost Salvage value (old) Total $ $ The current machine should be e Textbook and Media