Timex Inc. produces several models of flag poles. An outside supplier has offered to produce the flag poles for Timex for $270 each. Timex needs 1,500 flag poles annually. Timex provided the following unit costs for its flag poles:
Direct materials $100
Direct labor 110
Variable overhead 30
Fixed overhead (70% avoidable) 150
Instructions: Prepare an incremental analysis which shows the effect of the make-or-buy decision.