Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Wilma Company must decide whether to make or buy some of its components. The costs of producing 64,800 switches for its generators are as
Wilma Company must decide whether to make or buy some of its components. The costs of producing 64,800 switches for its generators are as follows. Direct materials $30,700 Variable overhead $44,900 Direct labor $34,552 Fixed overhead $83,600 Instead of making the switches at an average cost of $2.99 ($193,752 64,800), the company has an opportunity to buy the switches at $2.75 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 Make 30700 34552 i Buy Net Income Increase (Decrease) i $ 30700 i 34552 44900 i 44900 83600 i 65000 18600 Fixed manufacturing costs Purchase price 194552 Total cost 129552 129552 $ 194552 Wilma Company will incur $ of additional costs if it buys the switches.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started