Make-or-Buy Decision Companion Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $56 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 38% of direct labor cost. The total unit costs to produce comparable carrying cases are expected to be as follows: $25.00 16.00 Direct materials Direct labor Factory overhead (38% of direct labor) Total cost per unit If Companion 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 Carrying Case (Alternative 1) or Buy Carrying Case (Alternative 2). 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. Unit costs: Feedback 6.08 $47.08 Check My Work Purchase price Direct materials per unit Direct labor per unit Variable factory overhead per unit. Fixed factory overhead per unit Total unit costs Check My Work Differential Analysis Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2) February 24 Make Carrying Buy Carrying Case (Alternative 1) Case (Alternative 2) 0.00 ✓ -25.00 ✓ 16 X 2.40 X 3.68 X 3 0 X L Differential Effects (Alternative 2) O ● Coming December 9th - 16h Love and Monsters - Watch the tra... Dec 8 2:23
Make-or-Buy Decision Companion Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $56 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 38% of direct labor cost. The total unit costs to produce comparable carrying cases are expected to be as follows: $25.00 16.00 Direct materials Direct labor Factory overhead (38% of direct labor) Total cost per unit If Companion 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 Carrying Case (Alternative 1) or Buy Carrying Case (Alternative 2). 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. Unit costs: Feedback 6.08 $47.08 Check My Work Purchase price Direct materials per unit Direct labor per unit Variable factory overhead per unit. Fixed factory overhead per unit Total unit costs Check My Work Differential Analysis Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2) February 24 Make Carrying Buy Carrying Case (Alternative 1) Case (Alternative 2) 0.00 ✓ -25.00 ✓ 16 X 2.40 X 3.68 X 3 0 X L Differential Effects (Alternative 2) O ● Coming December 9th - 16h Love and Monsters - Watch the tra... Dec 8 2:23
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:eBook
Make-or-Buy Decision
Companion Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $56 per unit. The company, which is currently operating below full capacity, charges factory overhead
to production at the rate of 38% of direct labor cost. The total unit costs to produce comparable carrying cases are expected to be as follows:
$25.00
16.00
Direct materials
Direct labor
Factory overhead (38% of direct labor)
Total cost per unit
If Companion 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.
Unit costs:
Purchase price
a. Prepare a differential analysis dated February 24 to determine whether the company should Make Carrying Case (Alternative 1) or Buy Carrying Case (Alternative 2). 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.
Direct materials per unit
Direct labor per unit
Show Me How
Total unit costs
Feedback
Check My Work
Variable factory overhead per unit
Fixed factory overhead per unit
Check My Work
6.08
$47.08
Differential Analysis
Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2)
February 24
Make Carrying
Buy Carrying
Case (Alternative 1) Case (Alternative 2)
$
0.00
-25.00
✓
✓
16 X
2.40 X
3.68 X
3
Print Item
$
$
0
56
X
C
Differential Effects
(Alternative 2)
B
•
2
Coming December 9th - 16h
Love and Monsters - Watch the tra....
00
Dec 8
2:23
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 1 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education