Homework Answers
a) Differential analysis
| Make | Buy | |
| Direct material | 17850 | |
| Direct labor | 142800 | |
| Variable overhead | 71910 | |
| Purchase cost (5100*51.90) | 264690 | |
| Total relevant cost | 232560 | 264690 |
Cost to make = 232560
Cost to buy = 264690
Flint should make the subassemblies
b) Differential analysis
| Make | Buy | |
| Direct material | 17850 | |
| Direct labor | 142800 | |
| Variable overhead | 71910 | |
| Fixed overhead | 51000 | |
| Purchase cost (5100*51.90) | 264690 | |
| Total relevant cost | 283560 | 264690 |
Cost to make = 283560
Cost to buy = 264690
Flint should buy the sub assemblies
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