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Companion Computer Company has been purchasing carrying cases for its portable computers at a delivered...

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Accounting

Companion Computer Company has been purchasing carrying cases for its portable computers at a delivered cost of $68 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 40% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $25.00 Direct labor 32.00 Factory overhead (40% of direct labor) 12.80 Total cost per unit $69.80 Proposal to Manufacture Carrying Case October 11, 2010 Purchase price of carrying case $68.00 Differential cost to manufacture carrying case: Direct materials $25.00 Direct labor 32.00 Variable factory overhead Cost savings from manufacturing carrying case Is it advisable to make or buy the manufacturing case? Make

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