-Buy Dec Matchless Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $55 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 43% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $26 16 Direct labor Factory overhead (43% of direct labor) 6.88 $48.88 Total cost per unit If Matchless Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 15% of the direct labor costs. a. Prepare a differential analysis dated February 24 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. If required, round your answers to two decimal places. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Sales Price Costs: Differential Analysis Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2) February 24 Purchase price Direct materials per unit Direct labor per unit Variable factory overhead per unit Fixed factory overhead per unit Income (Loss) Buy Carrying Make Carrying Differential Effect Case (Alternative 1) Case (Alternative 2) on Income (Alternative 2) S ✓ -26 ✓ -16 ✔ -3.9 X Dooo!!! Monggo -55 26 ✓ 16 ✔
-Buy Dec Matchless Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $55 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 43% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $26 16 Direct labor Factory overhead (43% of direct labor) 6.88 $48.88 Total cost per unit If Matchless Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 15% of the direct labor costs. a. Prepare a differential analysis dated February 24 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. If required, round your answers to two decimal places. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Sales Price Costs: Differential Analysis Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2) February 24 Purchase price Direct materials per unit Direct labor per unit Variable factory overhead per unit Fixed factory overhead per unit Income (Loss) Buy Carrying Make Carrying Differential Effect Case (Alternative 1) Case (Alternative 2) on Income (Alternative 2) S ✓ -26 ✓ -16 ✔ -3.9 X Dooo!!! Monggo -55 26 ✓ 16 ✔
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please do not give image format
Please calculate correctly and carefully. Will upvote if correct
Transcribed Image Text:J
Make-or-Buy Decision
Matchless Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $55 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 43% of direct labor cost. The fully
absorbed unit costs to produce comparable carrying cases are expected to be as follows:
Direct materials
$26
Direct labor
Factory overhead (43% of direct labor)
Total cost per unit
If Matchless Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 15% of the direct labor costs.
Sales Price
Costs:
16
6.88
a. Prepare a differential analysis dated February 24 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. If required, round your answers to two decimal places. If an amount is zero, enter "0". For those boxes in which you must enter
subtracted or negative numbers use a minus sign.
Purchase price
Direct materials per unit.
Direct labor per unit
Variable factory overhead per unit
Fixed factory overhead per unit
Income (Loss)
$48.88
Differential Analysis
Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2)
February 24
S
Make Carrying
Buy Carrying
Differential Effect
Case (Alternative 1) Case (Alternative 2) on Income (Alternative 2)
0✔
0 ✓
0 ✓
0 ✓
-26 ✔
-16 ✔
-3.9 X
300000
-55
JDOQQQ
-55 ✔
26
16 ✔
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