Whispering Winds Company must decide whether to make or buy some of its components. The costs producing 60,200 switches for its generators are as follows. Direct Material $30, 100; Direct Labour $42, 140; Variable Overhead $51, 170; Fixed Overhead $57,792. Instead of making the switches at an average cost of $ 3.01 ($181,202/60, 200), the company has an opportunity to buy the switches at $2.81 per unit. If the company. purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated. parenthesis, e.g. (15,000).) decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the n Prepare an incremental analysis showing whether the company should make or buy the switches. (Roun Number of units: Variable manufacturing costs Fixed manufacturing costs Purchase price Total annual cost The company should the components. 60,200 $ Per Unit = P
Whispering Winds Company must decide whether to make or buy some of its components. The costs producing 60,200 switches for its generators are as follows. Direct Material $30, 100; Direct Labour $42, 140; Variable Overhead $51, 170; Fixed Overhead $57,792. Instead of making the switches at an average cost of $ 3.01 ($181,202/60, 200), the company has an opportunity to buy the switches at $2.81 per unit. If the company. purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated. parenthesis, e.g. (15,000).) decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the n Prepare an incremental analysis showing whether the company should make or buy the switches. (Roun Number of units: Variable manufacturing costs Fixed manufacturing costs Purchase price Total annual cost The company should the components. 60,200 $ Per Unit = P
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Whispering Winds Company must decide whether to make or buy some of its components. The costs
producing 60,200 switches for its generators are as follows. Direct Material $30, 100; Direct Labour $42,140;
Variable Overhead $51,170; Fixed Overhead $57,792. Instead of making the switches at an average cost of $
3.01 ($181,202/60, 200), the company has an opportunity to buy the switches at $2.81 per unit. If the company
purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated.
parenthesis, e.g. (15,000).)
decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or
Prepare an incremental analysis showing whether the company should make or buy the switches. (Round per unit answers to 2
Number of units:
Variable manufacturing costs
Fixed manufacturing costs
Purchase price
Total annual cost
The company should
the components.
60,200
$
Per Unit
$
$
Make
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