This current cost per unit is based on the following calculations: Parrot Enterprises manufactures one of...

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This current cost per unit is based on the following calculations: Parrot Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has offered to make the component at a cost of $12.70 per unit. Parrot Enterprises' current cost is $13.75 per unit of the component, based on the 80,000 components that Parrot Enterprises currently produces. E E (Click the licon to view the information.) None of Parrot Enterprises' fixed costs will be eliminated if the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $34,000 of contribution margin per year. Read the requirements . Requirement 1. If Parrot Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? (Enter a "0" for any zero balances. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy.) Incremental Analysis Make Outsource Data Table Outsourcing Decision Component Component Difference Variable costs Plus: Fixed costs Direct material per unit 3.75 Total cost of 80,000 components Direct labor per unit 7.25 Less: Profit from another product Variable manufacturing overhead per unit 1.00 Net cost Fixed manufacturing overhead per unit 1.75 13.75 If Parrot Enterprises outsources the manufacturing of the component, operating income will by $ Total manufacturing costs per unit Requirement 2. What is the maximum price per unit Parrot Enterprises would be willing to pay if it outsources the component? Print Done Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit. Cost if making 80,000 components Cost if outsourcing 80,000 components Using the basic formula you determined above solve for the indifferent outsourcing cost per unit. (Round your answer to the nearest cent, SX.XX.) The maximum price per unit Parrot Enterprises would be willing to pay if it outsources the component is $ per unit. This current cost per unit is based on the following calculations: Parrot Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has offered to make the component at a cost of $12.70 per unit. Parrot Enterprises' current cost is $13.75 per unit of the component, based on the 80,000 components that Parrot Enterprises currently produces. E E (Click the licon to view the information.) None of Parrot Enterprises' fixed costs will be eliminated if the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $34,000 of contribution margin per year. Read the requirements . Requirement 1. If Parrot Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? (Enter a "0" for any zero balances. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy.) Incremental Analysis Make Outsource Data Table Outsourcing Decision Component Component Difference Variable costs Plus: Fixed costs Direct material per unit 3.75 Total cost of 80,000 components Direct labor per unit 7.25 Less: Profit from another product Variable manufacturing overhead per unit 1.00 Net cost Fixed manufacturing overhead per unit 1.75 13.75 If Parrot Enterprises outsources the manufacturing of the component, operating income will by $ Total manufacturing costs per unit Requirement 2. What is the maximum price per unit Parrot Enterprises would be willing to pay if it outsources the component? Print Done Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit. Cost if making 80,000 components Cost if outsourcing 80,000 components Using the basic formula you determined above solve for the indifferent outsourcing cost per unit. (Round your answer to the nearest cent, SX.XX.) The maximum price per unit Parrot Enterprises would be willing to pay if it outsources the component is $ per unit.

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A F 1 Answer 1 Incremental Analysis Make 3 Outsource 4 Outsoursing Decision Difference Componets 375... View the full answer