Question

The management of Swifty Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called CISco component of the company's finished product The following information was collected from the accounting records and production data for the year ending December 31, 2020 1. 7,900 units of CISCO were produced in the Machining Department. 2. Variable manufacturing costs applicable to the production of each CISCO unit were direct materials $5.08, direct labor $4.15, indirect labor $0.41, utilities $0.44. 3. Fixed manufacturing costs applicable to the production of CISCO were: Cost Item Direct Allocated Depreciation $1,900 910 Property taxes 540 340 920 $3,360 $1,830 nable manufacturing and direct fixed costs will be eliminated-cisco s purchased. All cated costs will not be einn nated "CİSCO is purchased So if dSCO is purchased, the fixed manufacturing costs allocated to CISCO will have to be absorbed by other production departments 4. The lowest quotation for 7,900 CSCO units from a supplier is $79,899 5. IF CISCO units are purc and receiving costs totaling $1,270 per year either a negative sign preceding the number e-g. -45 or parentheses e.g. (45).) hased, freight and inspection costs would be $0.37 per unit, would be incurred by the Machining Department (a) Prepare an incremental analysis for Cisco. (Enter negative Net Income Increase Make CISCO Buy CISCO(Decrease) Direct material
Please explain thank you

Answer 1

Answer NET INCOME (Increase/ Decrease $40,132 $32,785 $3,239 $3,476 $1,900 $540 $920 ($79,899) $2,923 ($1,270 Particulars Direct Material Direct labor Indirect labor Utilities Depreciation Pro Insurance Purchase Price Freight and Inspection Receiving Costs Calculations 7,900* $5.08 7,900 $4.15 7,900 $0.41 7,900 $0.44 $1,900$910 $540$340 $920+$580 Make CISCO $40,132 $32,785 $3,239 $3,476 $2,810 $880 $1,500 Buy CISCO 0 0 0 0 $910 $340 $580 $79,899 $2,923 $1,270 Taxes 7,900* $0.37 Total annual Costs $84,822 $85,922 $1,100 The Company should Make the Product