20 acct questions 2

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(a)

Sheridan Company must decide whether to make or buy some of its components. The costs of producing 62,600 switches for its generators are as follows.

Direct materials $30,200 Variable overhead $44,800

Direct labor $31,844 Fixed overhead $77,200

Instead of making the switches at an average cost of $2.94 ($184,044 ÷ 62,600), the company has an opportunity to buy the switches at $2.73 per unit. If the company purchases the switches, all the variable costs and one-fourth of the �xed 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).)

Make Buy Net Income

Increase (Decrease)

221 Exam 3 Ch 22-25

Question 7 of 20 - / 7.5

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(b)

The parts of this question must be completed in order. This part will be available when you complete the part above.

Direct materials $ $ $

Direct labor

Variable manufacturing costs

Fixed manufacturing costs

Purchase price

Total cost $ $ $

Wilma Company will incur $ of additional costs if it the switches.

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221 Exam 3 Ch 22-25

Question 7 of 20 - / 7.5

2/23/23, 6:23 AM NWP Assessment Player UI Application

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221 Exam 3 Ch 22-25

Question 7 of 20 - / 7.5