1.

Diamond Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $83 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	$57
Direct labor	20
Factory overhead (40% of direct labor)	8
Total cost per unit	$85

If Diamond 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 10% of the direct labor costs.

	Required:
A.	Prepare a differential analysis, dated February 24 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
B.	On the basis of the data presented, would it be advisable to make the carrying cases or to continue buying them? Explain.

Cash flows from investing activities
Costs
Amount Descriptions
Direct materials per unit
Direct labor per unit
Fixed factory overhead per unit
Gain on sale of investments
Income (Loss)
Loss on sale of investments
Purchase price
Sales Price
Variable factory overhead per unit

^^^^Options given^^^^

A. Prepare a differential analysis, dated February 24 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.

Differential Analysis

Make Carrying Case (Alternative 1) or Buy Carrying Case (Alternative 2)

February 24

1		Make Carrying Case	Buy Carrying Case	Differential Effect on Income
2		(Alternative 1)	(Alternative 2)	(Alternative 2)
3	------------------------------------------------------------------------	-------------------------	-----------------------	-----------------------------------
4
5
6
7
8
9
10

2.

Kim Kwon Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $60,000, the accumulated depreciation is $25,890, its remaining useful life is five years, and its residual value is negligible. On May 4 of the current year, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $166,615. The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on present and proposed operations:

1		Present Operations	Proposed Operations
2	Sales	$206,500.00	$206,500.00
3	Direct materials	$73,165.00	$73,165.00
4	Direct labor	49,450.00	0.00
5	Power and maintenance	4,275.00	18,680.00
6	Taxes, insurance, etc.	1,370.00	3,495.00
7	Selling and administrative expenses	43,710.00	43,710.00
8	Total expenses	$171,970.00	$139,050.00

Required:

A.

Prepare a differential analysis dated May 4 to determine whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). Prepare the analysis over the useful life of the new machine. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.

A. Prepare a differential analysis dated May 4 to determine whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). Prepare the analysis over the useful life of the new machine. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.

Differential Analysis

Continue with Old Machine (Alternative 1) or Replace Old Machine (Alternative 2)

1		Continue with Old Machine	Replace Old Machine	Differential Effect on Income
2		(Alternative 1)	(Alternative 2)	(Alternative 2)
3	--------------------------------------------------------------------------------------------------
4
5
6
7
8
9
10
11
12

Labels
Cash flows from investing activities
Costs
May 4
Revenues
Amount Descriptions
Direct labor
Direct materials
Gain on sale of investments
Income (loss)
Loss on sale of investments
Power and maintenance
Purchase price
Sales
Selling and administrative expenses
Taxes, insurance, etc.
Total costs

^^^^Options Given^^^^

Part of the same problem. Thank you so much!