Wildhorse 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		$ 30,200		Variable overhead		$ 45,900
Direct labor		$ 38,252		Fixed overhead		$ 81,200

Instead of making the switches at an average cost of $ 2.91 ($ 195,552 67,200), the company has an opportunity to buy the switches at $ 2.67 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).)

		Make		Buy		Net Income Increase (Decrease)
Direct materials		$ enter a dollar amount		$ enter a dollar amount		$ enter a dollar amount
Direct labor		enter a dollar amount		enter a dollar amount		enter a dollar amount
Variable manufacturing costs		enter a dollar amount		enter a dollar amount		enter a dollar amount
Fixed manufacturing costs		enter a dollar amount		enter a dollar amount		enter a dollar amount
Purchase price		enter a dollar amount		enter a dollar amount		enter a dollar amount
Total cost		$ enter a total amount		$ enter a total amount		$ enter a total amount

Wildhorse Company will incur $ enter a dollar amount of additional costs if it select an option buysmakes the switches.