Aup 1 5ystem Announcements Problem 7-2A a-c (Video) CALCULATORI PRINTER VERSION BACK NEXT Your answer is partially corect. Try again. The management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called CISCO, is company's finished product. component of the The following information was collected from the accounting records and production data for the year ending December 31, 2020 el 1. 8,000 units of CISCO were produced in the Machining Department. 2. Variable manufacturing costs applicable to the production of each CISCO unit were direct materials $4.97, direct labor $4.34, indirect labor $0.42, utilities $0.36. 3. Fixed manufacturing costs applicable to the production of CISCO were ly Cost Item Allocated pirect Depreciation $2.100 $880 Property taxes 550 430 Insurance 960 630 $3,610 $1,940 All variable manufacturing and direct fxed costs will be eliminated if CISCO is purchased. Allocated costs will not be eliminated if CISCO is purchased. So manufacturing costs allocated to C1SCO will have to be absorbed by other production departments. CISCO is purchased, the fixed 4. The lowest quotation for 8,000 CISCO units from a supplier is $81,570 S. If CISCO units are purchased, freight and inspection costs would be $0.37 per unit, and receiving costs totaling $1,300 per year would be incured by the Machining Department (a) Prepare an incremental analysis for CISCO. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45)) Net Income Increase Make CISCO Buy CISCO (Decrease) Direct material 39,760 39,760 34,720 Direct labor 34,720 3,360 Indirect jabor 3,360 2880 Utilities 2880 Depreciation 2100 960 3060 Help I System Announcements $1,940 $3,610 OURCES All variable manufacturing and direct fixed costs will be eliminated if CISCO is purchased. Allocated costs will not b manufacturing costs allocated to CISCO will have to be absorbed by other production departments. b. c nission) 4. The lowest quotation for 8,000 CISCO units from a supplier is $81,570. 5. If CISCO units are purchased, freight and inspection costs would be $0.37 per unit, and receiving costs totaling (a) Prepare an incremental analysis for CISCO. (Enter negative amounts using either a negative sign preced rt Level deo) b1-b3 Net Income Increase ideo) Make CISCO Buy CISCO (Decrease) Direct material 39,760 C 39,760 Y Study Direct labor 34,720 34,720 Indirect labor 3,360 3,360 0 Utilities 2880 2880 Depreciation 2100 960 3,060 Property taxes 980 550 430 Insurance 1,570 330 960 Purchase price C 81,570 -81,570 -2,960 Freight and inspection C 2,960 1,300 Receiving costs -1,300) 85,370 -660 87,670 Total annual cost (b) Based on your analysis, what decision should management make? Dpo FA F3 F2