MakeorBuy Decision Matchless Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $55 per unit. The companyr which is currently operating below full capacity, charges factory overhead to production at the rate of 38% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be as follows: Direct materials 530 Direct labor 21 Factory overhead {38% of direct labor) 198 Total cost per unit $53.98 If Matchless Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the case are expected to be 12% of the direct labor costs. a. Prepare a differential analysis dated February 24 to determine whether the company should make (Alternative 1) or buy {Alternative 2] the carrying case. If required, , round your answers to two decimal places. If an amount is zero, enter "'0'. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Make Carrying Case (Alt. 1] or Buy Carrying Case (Alt. 2) February 24 Make Carrying Buy Carrying Differential Effect Case (Alternative 1] Case (Alternative 2) on Income (Alternative 2) Sales Price EGG COStS: Purchase price SSE Direct materials per unit E Direct labor per unit E Variable factory overhead per unit E Fixed factory overhead per unit E Income {Loss} 55:] S lphpppp a lphpppp p b. Assuming there were no better alternative uses for the spare capacity, it would V to manufacture the carrying cases. Fixed factory overhead is V to this decision. Differential Analysis Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2) February 24 Make Carrying Buy Carrying Differential Effect Case (Alternative 1) Case (Alternative 2) on Income (Alternative 2) Sales Price 0 0 0 Costs: Purchase price 0 55 X 55 X Direct materials per unit 30 X -30 X Direct labor per unit 21 X -21 X Variable factory overhead per unit 2.52 X -2.52 X Fixed factory overhead per unit 5.46 X 5.46 X 0 Income (Loss) 58.98 X 60.46 X 1.48 XRequirementA Differential Analysis Make Carrying Case (Alt.1) or Buy Carrying Cas (Alt.2) February 24 Differential Make Carrying Buy Carrying Effect on Income Case (Alt.1) Case (Alt.2) (Alt. 2) Sales Price 0 0 0 Costs: Purchase price 0 -55 -55 Direct materials per unit -30 30 Direct labor perunit -21 21 Variable factory overhead per unit -2.52 2.52 Fixed factory overhead per unit -5.46 -5.46 0 Income (Loss) -58.98 -60.46 -1.48