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Companion Computer Company has been purchasing carrying cases for its portable computers at a delivered cost of $68 per unit.
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 flly absorbed unit costs to produce comparable carrying cases are expected to be as follows:Direct Materials 25.00Direct labor 32.00Factory overhead (40% of direct labor) 12.80Total cost per unit 69.80If companion Computer Company manufactures the carry cases, fixed factory overhead costs will not increase and variable factory overhead costs associated witht he cases are expected to be 15% of the direct labor costs.a. Prepare differential analysis report, dated Oct 11, 2010, for the make-or-buy decision.b. On the basis of the data presented, would it be advisable to make the carrying cases or to continue buying them? Explain.
QUESTION:Companion Computer Company has been purchasing carrying cases for its portable computers ata delivered cost of $68 per unit. The company, which is currently operating below full...