Whispering Winds Company must decide whether to make or buy some of its components. The...

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Accounting

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.
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