Part B :

Current Designs 7-1 (Part 3) (Part Level Submission) Current Designs faces a number of important decisions that require incremental analysis. One of Current Designs' competitive advantages is found in the ingenuity of its owner and CEO, Mike Cichanowski, His involvement in the design of kayak molds and production techniques has led to Current Designs being recognized as an industry leader in the design and production of kayaks. This ingenuity was evident in an improved design of one of the most important components of a kayak, the seat. The "Revolution Seating System is a 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 Direct materials 22/unt Direct labor $14/unit Variable overhead $12/unit Rued overhead $20,000 Current Designs will need to produce 3,150 seats this year, 22% of the fived overhead will be avoided if the seats are purchased from an outside vendor. After soliciting prices from outside suppliers, the company determined that it will cost $52 to purchase a seat from an outside vendor Your answer is partially correct. Prepare an incremental analysis showing whether Current Designs should make or buy the "Revolution Seating System. (Enter decrease in net income then enter with a negative sign preceding the number or parenthesis, e.g. - 15,000 er (15,000). Net Income Increase Make Buy (Decrease) Direct Materials 69,300 69,500 Direct Labor 44,100 44,100 Variable Manufacturing Costs 37,000 37.100 Fixed Manufacturing Costs 20,000 15,600 4,400 Purchase Price 163,000 163,000 Total Anual Com 171,200 179.400 1.200 Current Designs should make the Revolution Seating System. Click if you would like to show Work for this question Open blank Show Work Copy Show Work from Previous attempt Increase Would your answer in (a) change the productive capacity released by not making the seats could be used to produce income of $19,000? (Enter decrease in net income then enter with a negative sigo preceding the number or parenthesis, ... -15,000 or (15,000).) Net Income Make Buy (Decrease) Total Annual Cost Opportunity Cost Total Cost Current Designs should the Revolution Seating System. Click if you would like to show Work for this questions Open Show Work