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Wilma Company must decide whether to make or buy some of its components

Accounting

Wilma Company must decide whether to make or buy some of its components. The costs of producing 61,300 switches for its generators are as follows.

Direct materiais $30,100 Variable overhead $44,600

Direct tabor $26,670 Fixed overhead $76,400

Instead of making the switches at an average cost of $2.90 ($177,770 + 61,300), the company has an opportunity to buy the switches at $2.72 per unit. If the company purchas:
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 make or buy the switches. (Enter negative amounts using either a negative sign preceding the
number e.g. -45 or parentheses e.g. (45).)
Net Income

Make Buy Increase (Decrease)
Direct materials $ $ 5
Direct labor
Variable manufacturing costs
Fixed manufacturing costs
Purchase price
Total cost $ $ $
Wilma Company will incur $ of additional costs if it the switches.

Would your answer be different if the released productive capacity wil generete additional income of $50,176? (Enter negative amounts using either a negative sign
preceding the number e.g. -45 or parentheses e.g. (45).)
Net Income
Make Buy Increase (Decrease)
Total Cost $ $ $
Opportunity cost
Total cost $ $ $

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