Wilma Company must decide whether to make or buy some of its components. The costs of producing 64,400 switches for itsgenerators are as follows.Direct materials $29,200Variable overhead $45,600Direct labor$31,404Fixed overhead$81,200Instead of making the switches at an average cost of $2.91 ($187,404 ÷ 64,400), the company has an opportunity to buythe switches at $2.67 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixedcosts will be eliminated.(a)Prepare an incremental analysis showing whether the company should make or buy the switches. (Enter negativeamounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)Net IncomeMakeBuyIncrease (Decrease)Direct materials$4$4$Direct laborVariable manufacturing costsFixed manufacturing costsPurchase priceTotal cost$4$1Wilma Company will incur $of additional costs if itthe switches.

Computation: Make Buy Net Income increase(decrease) Direct materials 29,200 29,200 Direct…

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).)

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).)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...

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