For most construction projects, Paver Heating and Cooling buys sheet metal and forms the metal into heating/cooling ducts as needed. The company estimates the costs of making and installing ductwork for the Kerry Park shopping mall to be as follows:

Net incremental drop down box: benefit or cost

Paver should drop down box: make or buy

Problem 7-4 For most construction projects, Paver Heating and Cooling buys sheet metal and forms the metal into heating/cooling ducts as needed. The company estimates the costs of making and installing ductwork for the Kerry Park shopping mall to be as follows: Materials $33,460 Labor to form ductwork 4,030 Labor to install ductwork 10,530 Miscellaneous variable installation costs 1,580 Fixed costs allocated based on labor hours 2,870 C Total cost $52,470 The fixed costs relate to the company's building, equipment, and office staff. The company plans to bill the Kerry Park developer $68,000 for services. Paver is currently behind schedule on other projects and is paying a late penalty of $1,110 per day. Walt Bradley, the owner of Paver Heating and Cooling, is considering ordering prefabricated ductwork for the Kerry Park job. The prefabricated ductwork will cost $40,180 (including the cost of sheet metal). If Walt buys the prefabricated ductwork, he'll be able to reassign workers to another project and avoid five days of late fees. Should Paver make the ductwork or buy it prefabricated? Net incremental |the prefabricated ductwork. of buying will be $ Paver should