Reference no: EM132547658

Maplewood Company must decide whether to make or buy some of its components. The costs of producing 59,300 switches for its
generators are as follows.

Direct materials $30,243

Variable overhead $53,370

Direct labour 42,696

Fixed overhead 60,486

Instead of making the switches at an average cost of $3.15 ($186,795 + 59,300), the company has an opportunity to buy the switches at
$2.95 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated.
Using an incremental analysis whether the company should make or buy the switches.

Question 1: What is the total Net Income Increase (Decrease)? (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000