I am unsure what I am doing wrong here.

Parsons Plumbing & Heating manufactures thermostats that it uses in several of its products. Management is considering whether to continue manufacturing the thermostats or to buy them from an outside source. The following information is available.

1.The company needs 80,000 thermostats per year. Thermostats can be purchased from an outside supplier at a cost of $6 per unit.

2.The cost of manufacturing thermostats is $7.50 per unit, computed as follows.

3.Discontinuing the manufacture of the thermostats will eliminate all of the direct materials and direct labor costs but will eliminate only 60 percent of the variable overhead costs.

4.If the thermostats are purchased from an outside source, certain machinery used in the production process would no longer have to be leased. Accordingly, $9,200 of fixed overhead costs could be avoided. No other reductions will result from discontinuing production of the thermostats.

Required:

a-1.Please see the schedule below to determine the incremental cost or benefit of buying thermostats from the outside supplier.

Direct materials $ 156,090 Direct labor 132, 090 Manufacturing overhead: Variable 168,090 Fixed 144, 900 Total manufacturing costs $ 600, 000 Cost per unit ($600,000 : 80,000 units) 7.50Req Al Req A2 Req B1 Req B2 Prepare a schedule to determine the incremental cost or benefit of buying thermostats from t Make the Buy the Incremental Thermostats Thermostats Analysis Manufacturing costs for 80,000 thermostats: Direct materials 156,000 (156,000) Direct labor 132,000 (132,000) Manufacturing overhead: Variable factory overhead 168,000 100,800 X (67 200) (x) Fixed factory overhead 144.000 134,800 (9,200) Cost to purchase X 480.000 5) 480,000 (X Cost to purchase Totals S 600,000 5 715,600 x 5 115.600 (x Req A2 3