Please do Part B

Question 34 Montel Firm is considering whether to outsource the manufacture of subcomponent JXY. The accounting department provides the following cost information for manufacturing 10,900 units of subcomponent JXY per month. Direct materials costs $39,200 Direct labour costs 30,800 Variable overhead 14,100 Fixed overhead* 13,600 *Fixed overhead includes $4,900 supervisor's salary. International Firm agrees to supply Montel with 10,900 units per month for a total cost of $131,700. If subcomponent JXY is outsourced, Montel will be able to increase the production and sales of its final product by 1,200 units per month; the product is sold for $115 per unit and its average variable costs per unit are $85. The supervisor's salary will be eliminated if subcomponent JXY is outsourced.(a) Your answer is correct. Prepare an incremental analysis for subcomponent JXY. (If an amount reduces the incremental costs then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).) Incremental Costs Make Buy (Savings) V Purchase price 131700 131700 Direct materials 39200 (39200) Direct labour 30800 (30800) Variable overhead 14100 (14100) V Fixed overhead 13600 8700 (4900) Opportunity cost 36000 (36000) Total monthly cost 133700 140400 6700(b) x Your answer is incorrect. Try again. Based on your analysis, what decision should management make? x Management should decide to buy JXY as it would cost an additional $ 17300 x if they were to make + the units. Attempts: 1 of 2 used