80.2K

Verified Solution

Link Copied!

Please help with the following. The user that answered this before was wrong with some of the inputs. Thank you for your time.

If Companion Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 13% of the direct labur cusls. a. Prepare a differential analysis dated February 24 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. If required, round your answers to two decimal places. If an amount is zero, enter "0". For those hoxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2) February 24 Make Carrying Buy Carrying Differential Effect Case (Alternative 1) Case (Alternative 2) on Income (Alternative 2) 0 Sales Price () 0 Costs: Purchase price si $ 62 $ 62 X Direct materials per unit 30 0 30 Direct labor per unit 20 0 20 Variable factory overhead per unit 2.6 X 2.6 Fixed factory overhead per unit 5. X 5.8 X Income (I oss) 511.40 $ 67.80 X $9.40 x Feedback Check My Work a. For the make and buy alternatives provide the unit costs. Use percentage to separate variable and fixed costs. Determine the differential effect on Income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2. b. Assuming there were no better alternative uses for the spare capacity, it would be advisable to manufacture the carrying cases. Fixed factory overhead is irrelevant to this decision

Answer & Explanation Solved by verified expert

See Answer