Carolina manufactures an AC unit called GB231. Variable manufacturing costs per unit of GB231 are as follows:
| Direct materials | $23.22 |
| Direct labor | $15.50 |
| Variable manufacturing overhead | $7.53 |
The Wood Company has offered to sell Carolina 6,500 units of GB231 for $37.80 per unit. If Carolina accepts the offer, $65,000 of fixed manufacturing overhead will be eliminated.
| Applying differential analysis to the situation, what should Carolina do? |
a. Calculate whether the outsourcing will be a savings or cost more.
Round to 0 decimals. If outsourcing is more than manufacturing, the amount should be entered with a negative(-)
b. Make or Buy? enter Make or Buy
Carolina manufactures an AC unit called GB231. Variable manufacturing costs per unit of GB231 are as follows:
| Direct materials | $23.22 |
| Direct labor | $15.50 |
| Variable manufacturing overhead | $7.53 |
The Wood Company has offered to sell Carolina 6,500 units of GB231 for $37.80 per unit. If Carolina accepts the offer, $65,000 of fixed manufacturing overhead will be eliminated.
| Applying differential analysis to the situation, what should Carolina do? |
a. Calculate whether the outsourcing will be a savings or cost more.
Round to 0 decimals. If outsourcing is more than manufacturing, the amount should be entered with a negative(-)
b. Make or Buy? enter Make or Buy
