Mighty Safe Fire Alarm is currently buying 62,000 motherboards from MotherBoard, Inc. at a price of $66 per board. Mighty Safe is considering making its own motherboards. The costs to make the motherboards are as follows: direct materials, $32 per unit; direct labor, $12 per unit; and variable factory overhead, $15 per unit. Fixed costs for the plant would increase by $87,000. Which option should be selected and why

d) Make, Increase in profits $434,000

Explanation:

                            Differential analysis

                                               Make                                Buy

Direct material   (62000I*32) $1,984,000

Direct labor              (62000*12)  $744,000

Variable overhead   (62000*15)  $930,000

Purchase cost                                                      (62000*66) $4,092,000

Total relevant cost                      $3,658,000                         $4,092,000

So, the Company Should make because the cost is lower. Increase in profits $434,000 ($,092,000-$3,658,000)

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.