Notson, Inc. produces several models of clocks. An outside supplier has offered to produce the...
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Notson, Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for Notson for $420 each. Notson needs 1,200 clocks annually. Notson has provided the following unit costs for its commercial clocks:
| Direct materials | $100 | ||
| Direct labor | 140 | ||
| Variable overhead | 80 | ||
| Fixed overhead (40% avoidable) | 150 |
Prepare an incremental analysis which shows the effect of the make-or-buy decision.
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