Kingbird Company must decide whether to make or buy some of its components. The costs of producing 60,100 switches for its generators are as follows. Direct materials $29,449 Variable overhead $60,100 Direct labour 42,671 Fixed overhead 59,499 Instead of making the switches at an average cost of $3.19 ($191,719 ÷ 60,100), the company has an opportunity to buy the switches at $2.99 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated. Prepare an incremental analysis showing whether the company should make or buy the switches. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).) Number of units: +A $ Per Unit +A $ Make

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Kingbird Company must decide whether to make or buy some of its components. The costs of producing 60,100 switches for its
generators are as follows.
Direct materials
$29,449
Variable overhead
$60,100
Direct labour
42,671
Fixed overhead
59,499
Instead of making the switches at an average cost of $3.19 ($191,719 ÷ 60,100), the company has an opportunity to buy the switches
at $2.99 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated.
Prepare an incremental analysis showing whether the company should make or buy the switches. (Round per unit answers to 2
decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or
parenthesis, e.g. (15,000).)
Number of units:
+A
$
Per Unit
+A
$
Make
Transcribed Image Text:Kingbird Company must decide whether to make or buy some of its components. The costs of producing 60,100 switches for its generators are as follows. Direct materials $29,449 Variable overhead $60,100 Direct labour 42,671 Fixed overhead 59,499 Instead of making the switches at an average cost of $3.19 ($191,719 ÷ 60,100), the company has an opportunity to buy the switches at $2.99 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated. Prepare an incremental analysis showing whether the company should make or buy the switches. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).) Number of units: +A $ Per Unit +A $ Make
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