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a component of the company's finished product The management of Borealis Manufacturing Company is trying to decide whether to continue manufacturing a part or to
a component of the company's finished product The management of Borealis Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called WISco, The following information was collected from the accounting records and production data for the year ending December 31, 2020: 1. The machining department produced 8,300 units of WISCO during the year. 2. Variable manufacturing costs applicable to the production of each WISCO unit were direct materials $4.90, direct labour $4.30, indirect labour $0.45, and utilities $0.32. 3. Fixed manufacturing costs applicable to the production of WISCO were as follows: Direct Allocated Cost Item Depreciation $895 $2,080 Property taxes 540 150 Insurance a00 575 $3,520 $1,620 The company will eliminate all variable manufacturing and direct fixed costs if it purchases WISCO. Allocated costs will have to be absorbed by other production departments. 4. The lowest quotation for 8,300 WISCO units from a supplier is $82,250 5. If WISCO units are purchased, freight and inspection costs would $0.43 per unit, and the machining department would incur receiving costs totalling $1,275 per year. Prepare an incremental analysis for WISCO. (If an amount reduces the net income then enter with a negative sign preceding the number, e.g.-15,000 or parenthesis, e.g. (15,000).) Net Income Make Wisco Buy Wisco Increase (Decrease) Total annual cost Based on your analysis, what dedsion should management make? The company should WISCO. produce $3,100 of net income with the facilities currently being used to manufacture WISCO? (If an amount reduces the net income then enter with a negative sign preceding the number, e.e-15 a n hesis e e 15.0001e opportunity Not income will be by $ Tncrease (Decrease) Make Wisco Buy Wisco Total annual cost Opportunity cost Tatal cost
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