Calculator Make-or-buy decision riptions Differential Analysis Final Question up

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Calculator Make-or-buy decision riptions Differential Analysis Final Question upiter Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $83 per unt. The company, which is cumenty operating belowta capacity, charges factory overhead to production atthe rate of 40%ofdirect labor cost. The fulyatsobed unt coss to souce comparable carrying cases are expected to be as follows Direct materials Direct labor Factory overhead (40% of direct labor) Total cost per unit $57 20 8 $85 Jupiter Computer Company manufactures the carryýing cases, foxed factory overhead costs will not increase with the cases ve expected to be 10% ofthe drect labor costs. Required A Prepare a gferentia enalysis, dated July 19 to determine whether the company should make(Atemative 1) or buy (Atemative 2) tne carying wording af the answer choices for text entries. For hose bowes n case. Refer to the lists of Labels and Amount Descriptions for the exact which you must enter subtracted or negative numbers use a minus sign automatically appear if required there is no amount or an amount is zero, enter "0: A colon ( B. On the basis of the data presented, would it be advisable to make the carmying cases or to continue buying them? Explain Previous Next work saved

Explanation / Answer

Cost, If the carrying cases is manufactured in house Direct Material $57 Direct Labor $20 Variable Vactory Overhead $2 [10%*$20] Fixed Vactory Overhead $0 [SUNK COST] Manufacturing Cost of Carrying Cost $79 Cost if purchased from Outside $83 It is better to manufcture the carrying cases rather than purchaseing from outside vendor as the manufacturing cost ($79) is less than the outside purchasing cost($83)

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