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View Policies Current Attempt in Progress Innova uses 1000 units of the component IMC2 every month to manufacture one of its
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Answer #1
Incremental Analysis
Make Buy Net Income Increase
Direct Material 55 0 55
Direct Labor 35 0 35
Material Handling 6.5 0 6.5
Variable overhead 120*60% 72 0 72
Purchase Price 0 200 -200
Total Unit cost 168.5 200 -31.5
Note that Fixed overheads are irrelvant as they will be incurred in both the cases
Hence, better to make
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