Acct 222 Extra Credit (Ch1-8. 35 points) Spring, 2019 Problem 7 E8-43B Analyze outsourcing decision (5 points) McCall Enterprises manufactures one of the components used to assemble its main company has offered to make the component at a cost of $14.10 per unit. McCall Enterprises' current component, based on the 100,000 components that McCall Enterprises the following calculations: product. Specialty Products, Inc. cost is $17.00 per unit of the currently produces. This current cost per unit is based on Direct material per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit Total manufacturing costs per unit S 5.50 6.5 $17.00 None of McCall Enterprises' fixed costs will be eliminated if the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $30,000 of contribution margin per year. Requirements 1. If McCall Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? What is the maximum price per unit McCall Enterprises would be willing to pay if it outsources the component? 2