Temple, Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for Temple for $420 each. Temple needs 1,200 clocks annually. Temple has provided the following unit costs for its commercial clocks:
- Direct materials $100
- Direct labor 120
- Variable Overhead 80
- Fixed Overhead (40% avoidable) 150
Instructions:
Prepare an incremental analysis which shows the effect of the make-or-buy decision.