Reference no: EM132978414

Question - Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 1,800 units):

Direct materials $27

Direct labor 107

Variable overhead 19

Fixed overhead 43

Total $196

Trailblazers has offered to sell the assembly to Mobility for $169 each. The total order would amount to 1,800 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $10,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $35,950.

Required - How to prepare a schedule that shows the total differential costs.