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Alanco, Inc. manufactures a variety of products and is currently manufacturing all of its own component parts. An outside supplier has offered to sell one of those components to Alanco. The Controller has asked you to help evaluate this offer to determine if the company should make or buy the component. Use the information included in the Excel Simulation and the Excel functions described below to complete the task.

Direct Materials: $4.00

Direct Labor: $6.00

Variable MOH: $2.00

Fixed MOH, traceable: $5.00 // composed of two items, Depreciation of equipment 30%, Supervisor Salary 70%

Fixed MOH, common but allocated: $8.00

Total Cost: $25.00

Supplier Price: $21.00

Units used per year: 12,000

Assuming the company has no alternative use for the facilities now being used to produce the component, complete the following analysis to determine if the outside supplier's offer should be accepted.

Per Unit Differential Cost || 12,000 units

Make || Buy Make || Buy

Cost of Purchasing || ?? || ??

Direct Materials ?? || ?? ||

Direct Labor ?? || ?? ||

Variable Manufacturing Overhead ?? || ?? ||

Fixed Manufacturing Overhead, tracable ?? || ?? ||

Fixed Manufacturing Overhead, common ?? || ?? ||

Total Costs ?? || ?? ||

Based on this analysis, write an if statement to determine if Alanco should make or buy the component.

Should Alanco make or buy the component?

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