Question

25-3.07make buy decision

Both pictures are the same question

Make-or-Buy Decision below full capacity, c expected to be as follows: s factory overhead to Direct materials 19 Analysis Purchase price
Part 1

Part 2

Answer 1

Differential analysis
			Make	Buy	Differential effect
Sales price			0	0	0
Cost:
Purchase price			0	60	-60
Direct Mmaterial per unit			26	0	26
Direct Labour per unit			19	0	19
Variable factory OH per unit			2.85	0	2.85
Fixed OH per unit			5.51	5.51	0
Income /(Loss)			-53.36	-65.51	-12.15
Assuming there were no better alternative uses for the spare capacity, it would be Better to manufacture the ccarrying casses.
Fixed Overheads are Irelevant cost to this decision.