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Process or Sell Product J19 is produced for $3.4 per gallon. Product J19 can be sold without additional processing for $4.07 per gallon, or processed further into Product R33 at an additional cost of $0.44 per gallon. Product R33 can be sold for $4.46 per gallon. a. Prepare a differential analysis dated April 30 on whether to sell Product J19 (Alternative 1) or process further into Product R33 (Alternative 2). If required, round your answers to the nearest whole dollar. Differential Analysis Sell Product J19 (Alt. 1) or Process Further into Product R33 (Alt. 2) April 30 Sell Product J19 (Alternative 1) Process Further into Product R33 (Altenative 2) Differential Effect on Income (Alternative 2) Revenues, per unit 4.07 4.46 0.39 0 Costs, per unit 0.44 -0.44 Income (loss), per unit 4.07 X 4.02 X -0.05 Feedback Check My Work For both products, subtract the unit costs from the price. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 2 from alternative 1. Learning Objective 1. b. Should Product J19 be sold (Alternative 1) or processed further into Product R33 (Alternative 2)? Sell Product 319 v Feedback Make-or-Buy Decision Fremont Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $56 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 37% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $30 Direct labor 20 Factory overhead (37% of direct labor) 7.4 Total cost per unit $57.4 If Fremont Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 15% of the direct labor costs. a. Prepare a differential analysis dated September 30 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. If required, round your answers to two decimal places. If an amount is zero, enter "0". Use a minus sign to indicate a loss. Differential Analysis Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2) September 30 Differential Effect on Income (Alternative 2) Make Carrying Case (Alternative 1) Buy Carrying Case (Alternative 2) 0V 0 Sales price Unit costs: 0V 56V Purchase price -56 30 Direct materials 30 0 20 Direct labor 20 Variable factory overhead 0 Fixed factory overhead 4.4 0 4.4 57.4 X 60.4 X Income (Loss) en Make or Buy A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $164 per unit (100 bottles), indluding fixed costs of $32 per unit. A proposal is offered to purchase small bottles from an outside source for $100 per unit, plus $7 per unit for freight. a. Prepare a differential analysis dated July 31 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles, assuming fixed costs are unaffected by the decision. If an amount is zero, enter "O". Use a minus sign to indicate a loss. Differential Analysis Make Bottles (Alt. 1) or Buy Bottles (Alt. 2) July 31 Make Bottles (Alternative 1) Differential Effect on Income (Alternative 2) Buy Bottles (Alternative 2) Sales price Unit costs: Purchase price 0 100 -100 Freight 0 7 -7 Variable costs 132 132 Fixed factory overhead 32 32 X 164 139 X Income (Loss) 25 Feedback Check My Work For the make and buy alternatives provide the unit costs. Determine the differential effect on income of the revenues, costs, and income (loss) by subtragting alternative 2 from alternative 1. Learning Objective 1

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