Pharoah Company must decide whether to make or buy some of its components. The costs of producing 63,800 switches for its generators are as follows. Direct materials Direct labor (a) Direct materials Direct labor $29,300 $30,634 Instead of making the switches at an average cost of $2.93 ($186,934÷63,800), the company has an opportunity to buy the switches at $2.74 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated. Variable manufacturing costs Purchase price Prepare an incremental analysis showing whether the company should make or buy the switches. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Fixed manufacturing costs Total cost $ Variable overhead $ Fixed overhead Pharoah Company will incur $ $44,200 $82,800 Make $ $ Buy of additional costs if it $ $ Net Income Increase (Decrease) the switches.
Pharoah Company must decide whether to make or buy some of its components. The costs of producing 63,800 switches for its generators are as follows. Direct materials Direct labor (a) Direct materials Direct labor $29,300 $30,634 Instead of making the switches at an average cost of $2.93 ($186,934÷63,800), the company has an opportunity to buy the switches at $2.74 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated. Variable manufacturing costs Purchase price Prepare an incremental analysis showing whether the company should make or buy the switches. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Fixed manufacturing costs Total cost $ Variable overhead $ Fixed overhead Pharoah Company will incur $ $44,200 $82,800 Make $ $ Buy of additional costs if it $ $ Net Income Increase (Decrease) the switches.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please help me with show all calculation thanku
Transcribed Image Text:Pharoah Company must decide whether to make or buy some of its components. The costs of producing 63,800 switches for its
generators are as follows.
Direct materials
Direct labor
(a)
Direct materials
Direct labor
$29,300
$30,634
Instead of making the switches at an average cost of $2.93 ($186,934÷63,800), the company has an opportunity to buy the switches
at $2.74 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated.
Variable manufacturing
costs
Purchase price
Prepare an incremental analysis showing whether the company should make or buy the switches. (Enter negative amounts using
either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Fixed manufacturing
costs
Total cost
$
Variable overhead
$
Fixed overhead
Pharoah Company will incur $
$44,200
$82,800
Make
$
$
Buy
of additional costs if it
$
$
Net Income
Increase (Decrease)
the switches.
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