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Make-or-Buy Decision

Matchless Technologies Company has been purchasing carrying cases for its portable tablets at a delivered cost of $60 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 42% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be as follows:

Direct materials	$29.00
Direct labor	16.00
Factory overhead (42% of direct labor)	6.72
Total cost per unit	$51.72

If Matchless Technologies 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.

Prepare a The area of accounting concerned with the effect of alternative courses of action on revenues and costs.differential analysis report for the make-or-buy decision. Enter your final answer as a positive amount if it represents a net cost savings; enter a negative amount if it represents an increase in cost.

MATCHLESS TECHNOLOGIES COMPANY

Manufacture Carrying Case

Differential Analysis Report Purchase price of carrying case Differential cost to manufacture carrying case: Direct materials Direct labor Variable factory overhead Cost savings from manufacturing carrying case

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