Solution:
Differential Analysis- Making Part 551 (alt 1) or Buying Part 551 (Alt2) | |||
Particulars | Making Part 551 (Alt 1) | Buying Part 551 (Alt 2) | Financial advantage (Disadvantage) of buying (Alternative 2) |
Costs: | |||
Purchase Price (12000*$37.70) | $0.00 | $452,400.00 | -$452,400.00 |
Direct material | $75,600.00 | $0.00 | $75,600.00 |
Direct Labor | $68,400.00 | $0.00 | $68,400.00 |
Variable overhead | $57,600.00 | $0.00 | $57,600.00 |
Supervisory salary | $84,000.00 | $0.00 | |
Avoidable Fixed general overhead | $17,000.00 | $0.00 | $17,000.00 |
Total Cost | $302,600.00 | $452,400.00 | -$233,800.00 |
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