AC201 Chapter 6 Class Handout Exercise 6-12 Making an outsourcing decision with qualitative factors considered (L.O 6-3) Martinez Computers curmemly parchases for $40 cach keytoard it uses in the 50,000 compusers it makes and sells annsally. Each compan uses one keyhoard. The company has idfle canacity and is comsidering whether to make the keyboards that is meeds. Martinez estimates tha materials and labor conts for making keythoards would be $25 each In addition, supervisoey salarics, rent, and odher manufacturing costs would be $1.000,000 Akecatied facility-level costs would amount to $175,000 Required a Desermine the change in net income that Martince would experience if it decides to make the keyboards Cost to Make Cost to Buy h. Discuss the qualitative factors that Martincz should coesader Evercise 6-14B Segment elimination decision (LO 6-4) Reid Company operates three segments. Income statements for the segments imply that Reid could impeove profitability by eliminating Segment X Reid COMPANY Income Statement for the Year 2018 ment Sales S 46,000 $125,000 $100,000 Cost of goods sold (36,500) (41,000) 42,500 Contribution margin General fixed oper. exp. (allocation of president's salary) 10.000) (10.000) (d Advertising expense (specific to individual segments) 1.530 Net income 3,000 47,500 554000 S 37,500 ENLExplain the clict on Reid's profitability if Segment X is eliminated