Wilma 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 $2.97 ($199,584 67,200), 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. an incremental analysis showing whether the company should 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$

Direct labor

Variable manufacturing costs

Fixed manufacturing costs

Purchase price

Total cost

b.Would your answer be different if the released productive capacity will generate additional income of $48,176? (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)

Total Cost

Opportunity cost

Total cost

(Yes,or NO)the answer is (Different, or Same)The analysis shows that net income will be (increased, or decreased)by $_______