i need help with 3b

52 53 54 55 56 57 58 59 60 61 Situation 3 One of Current Designs' competitive advantages is found in the ingenuity of its owners and CEO, Mike Cichanowski. His involvement in the design of kayak molds and production techniques has led to Current Designs being recognized as an lindustry leader in the design and production of kayaks. This ingenuity was evident in an improved design of one of the most important component of a kayak, the seat. The "Revolution Seating System" is one-of-a-kind, rotating axis seat that gives unmatched, full contact, under-leg support. It is quickly adjustable with a lever-lock system that allows for a customizable seat position that maximizes comfort for the rider. Having just designed the "Revolution Seating System". Current Designs must now decide whether to produce the seats internally or buy them from an outside supplier. The costs for Current Designs to produce the seats are as follows. 63 Direct materials Variable overhead $36/unit $27/unit Direct labor Fixed overhead $21.60/unit $36,000 64 65 66 Current Desiens will need to produce 5.400 seats this year, 25% of the fixed overhead will be avoided if the seats are 67 purchased from an outside vendor. After soliciting prices from outside suppliers, the company determined that it will 68 cost $90 to purchase a seat from an outside vendor. 69 70 Instructions 71 la Prepare an incremental analysis showing whether Current Designs should make or buy the "Revolution Seating 72 | System." 73 lb) Would your answer in to change if the productive capacity released by not making the seats could be used to 74 produce income of $36,000? 75 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". AB G H Situation 3 (a) Prepare an incremental analysis showing whether Current Designs should make or buy the "Revolution Seating System." Make $194,400.00 $116,640.00 Direct materials Direct labor Variable mfg. costs Fixed mfg. costs Purchase price Total annual cost Net Income Increase (Decrease) $194,400.00 $116,640.00 $145,800.00 $9,000.00 (5486,000.00) $145,800.00 $36,000.00 Buy $0.00 $0.00 $0.00 - $27,000.00 $486,000.00 $513,000.00 $0.00 $492,840.00 ($20,160,00) Based solely on financial considerations, Current Designs should indicate by placing an "X" in the appropriate cell below) Make Buy 8 Points Response: Since there is an additional cost of $20,160 in buying the seat from outside hence it is better to produce Situation 3 (b) Would your answer in (a) change if the productive capacity released by not making the seats could be used to produce income of $36,000? Net Income. Increase (Decrease) Make Buy FINM2 Total annual cost Opportunity cost Total cost 87 88 789 Based solely on financial considerations, Current Designs should indicate by placing an "X" in the appropriate cell below) Make Buy X 8 Points 190 191 Response 192 193 194 195 196