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Do It! Review 21-3 Wilma Company must decide whether to make or buy some of...

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Accounting

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Do It! Review 21-3 Wilma Company must decide whether to make or buy some of its components. The costs of producing 62,500 switches for its generators are as follows. Direct materials $29,700 Variable overhead $45,400 Direct labor$29,675 Fixed overhead $79,600 Instead of making the switches at an average cost of $2.95 ($184,37562,500), the company has an opportunity to buy the switches at $2.67 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated Prepare an incremental analysis showing whether the company should buy the switches. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g Net Income Increase (Decrease) Make Direct materials Direct labor Variable manufacturing costs Fixed manufacturing costs Purchase price Total cost Wilma Company will incur $ of additional costs if it the switches

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