Prepare the incremental analysis for the decision to make or buy the lampshades. (Round answers to O decimal places, e.g. 5,275. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) Number of units: 48,200 Make $ Buy Net Income Increase (Decreas
Prepare the incremental analysis for the decision to make or buy the lampshades. (Round answers to O decimal places, e.g. 5,275. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) Number of units: 48,200 Make $ Buy Net Income Increase (Decreas
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Splish Inc. has been manufacturing its own shades for its table lamps. The company is currently operating at 100% of capacity, and
variable manufacturing overhead is charged to production at the rate of 50% of direct labour costs. The direct materials and direct
labour costs per unit to make the lampshades are $4.50 and $5.80, respectively. Normal production is 48,200 table lamps per year.
A supplier offers to make the lampshades at a price of $13.50 per unit. If Splish Inc. accepts the supplier's offer, all variable
manufacturing costs will be eliminated, but the $42,800 of fixed manufacturing overhead currently being charged to the lampshades
will have to be absorbed by other products.
Transcribed Image Text:Prepare the incremental analysis for the decision to make or buy the lampshades. (Round answers to O decimal places, e.g. 5,275. If
an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). While
alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.)
Number of units: 48,200
$
$
Make
$
$
Buy
$
$
Net Income
Increase (Decreas
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