PLEASE HELP WITH SITUATION 2 PART B AND SITUATION 3

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 arn industry 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 fora 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. Direct materials Variable overhead $30/unit $22.5/unit Direct labor Fixed overhead $18/unit $30,000 Current Designs will need to produce 4,500 seats this year, 25% of the fixed 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 $75 to purchase a seat from an outside vendor Instructions (a) Prepare an incremental analysis showing whether Current Designs should make or buy the Revolution Seating System." Would your answer in (a) change if the productive capacity released by not making the seats could be used to produce income of $30,000? (b) NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a"? Situation1 (a) Prepare an incremental aalysis to determine whether Current Designs should accept this special order to produce the coolers. Net Income Increase (Decrease 556,250.00 Reject Order Accept Order Revenues $0.00 556,250.00 Costs: Direct materials Direct labor Variable overhead Fixed overhead Cost to modify existing mold $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $18,000.00 $13,500.00 $4,500.00 $0.00 53,000.00 $39,000.00 $17,250.00 ($18,000.00) ($13,500.00) ($4,500.00) $0.00 ($3,000.00) ($39,000.00) $17,250.00 Total costs Net income Based solely on financial considerations, Current Designs should (indicate by placing an "X in the appropriate cell below) Reject Accept Response: $17,250. Based on the incremental analysis, the company should accept the order because the order will result in a net income of (b) Discuss additonal factors that Mike and Diane should consider if Current Designs is currently operating at full capacit Response: If Current Designs was operating at full capacity and doesn't have unused machinery to produce the coolers, they will have to spend money on capacity improvments and then the fixed costs will become relevant. The net income will be reduced to $15,750 (17,250-1,500 fixed overhead). Although the net income would be less than if they had unused capacity, they will still have a postive income of $15,750, so they should still accept the order