Question

Complete the make-or-buy analysis. All answers must be inputted in the form of formulas.

SS FILE HOME Prepare a make-or-buy analysis - Excel FORMULAS DATA REVIEW INSERT PAGE LAYOUT VIEW Sign In Paste B I Clipboard U. . - A - Alignment Number Conditional Format as Cell Cells Editing Formatting Table Styles Fonts Alanco, Inc. manufactures a variety of products and is currently maunfacturing all Styles A1 5 6 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, direct Fixed manufacturing overhead, common but allocated Total cost 4.00 6.00 2.00 5.00 8.00 25.00 8 9 Supplier price 5 21.00 Units used per year 12,000 16 The fixed manufacturing overhead, direct Depreciation of equipment (no resale value) Supervisor salary 3096 7096 20 1. Assuming the company has no alternative use for the facilities now being used to produce the 21 component, complete the following analysis to determine if the outside supplier's offer should be accepted. Per Unit Differential Cost Moke Buy Total for 12.000 units Make Buy 26 Cost of purchasing 27 Direct materials 28 Direct labor 29 Variable manufacturing overhead 30 Fixed manufacturing overhead, traceable 31 Fixed manufacturing overhead, common 32 Total costs 33 Based on this analysis, write an if statement to determine if Alanco should make or buy the component.

Answer 1

Solution:

Particulars	Per unit differential cost		Total for 12000 units
	Make	Buy	Make	Buy
Cost of Purchasing		$21.00		$252,000.00
Direct materials	$4.00		$48,000.00
Direct labor	$6.00		$72,000.00
Variable manufacturing overhead	$2.00		$24,000.00
Fixed manufacturing overhead, traceable	$3.50		$42,000.00
Fixed manufacturing overhead, common	$0.00		$0.00
Total costs	$15.50	$21.00	$186,000.00	$252,000.00

Alanco should make the component.