??%? Thu 201 PM a@ Check Your Work Od Camp Company manufactures awnings for its

Question

??%? Thu 201 PM a@ Check Your Work Od Camp Company manufactures awnings for its own ine of bents. The company is cumenitly operaing at capacity and has received an offer from one of ts suppliers to make 11,000 nmirgs t needsfor S20 each. OldCamp's ts to make the awning are S7?,deoct materas and SS ndirect labor. Variable mandadig oerhead s 75 peant of dirod labor·lf0d Camp accopes the ofler, S37,000 offied maruanng overhead ourenty being charged to to awgs wa hre to be absorbed by0ter product lines 1.Complete the incremental analysis for the decision to make or buy the awnings in the table provided below O Answer is not complete. 2 Should Oid Camp continue to manufacture the awnings or should they purchase the awnings from the suppler? Assuming that the capecity rolossed by puchaning the ewnings elowed Old Camp to recond a prot of $35.000, uhouid Oid Cmp contnue to mandlee or purchase the 8 2 W E

Explanation / Answer

Make Buy Net Income Increase/(Decrease) Direct Material 11000*7 77000 77000 Direct Labour 11000*6 66000 66000 Variable Overhead 11000*6*75% 49500 49500 Fixed Overhead 37000 37000 Purchase Price 11000*20 220000 -220000 Total 229500 257000 -27500 Old Camp Should continue to manufacture the awining because purchasing the awning will cost the company an additional $27500

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