ANSWER PART (B) Please

*Current Designs 7-1 (Part 3) (Part Level Submission) Current Designs faces a number of important decisions that require incremental analysis. One of Current Designs' competitive advantages is found in the ingenuity of its owner and CEO, Mike Cichanowski. His involvement in the design of kayak molds and production techniques has led to Current Designs being recognized as an industry leader in the design and production of kayaks. This ingenuity was evident in an improved design of one of the most important components of a kayak, the seat. The "Revolution Seating System" is a 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 for a 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 labor Direct materials Variable overhead $25 /unit $13/unit $17 /unit $20,000 Fixed overhead Current Designs will need to produce 2,850 seats this year; 26% 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 $58 to purchase a seat from an outside vendor. *(a) Your answer is correct. Prepare an incremental analysis showing whether Current Designs should make or buy the "Revolution Seating System." (Enter decrease in net income then enter with a negative sign preceding the number or parenthesis, e.g. -15,000 or (15,000).) Net Income Increase (Decrease) Make Buy Direct Materials $171250 $171250 Direct Labor 748450 748450 Variable Manufacturing Costs T37050 137050 Fixed Manufacturing Costs T20000 114800 75200 Purchase Price 1165300 |(165300) Total Annual Cost $1176750 $7180100 $T(3350) ! Current Designs should Tmake the Revolution Seating System. Attempts: 2 of 15 used Net Income Increase (Decrease) Make Buy Direct Materials $171250) $171250 Direct Labor 1484501 48450 Variable Manufacturing Costs 737050 137050 Fixed Manufacturing Costs T20000 114800 75200 Purchase Price T165300 ) T(165300) Total Annual Cost $11 76750 $7180100 ST3350) Current Designs should Take the Revolution Seating System. Attempts: 2 of 15 used *(b) Your answer is partially correct. Try again. Would your answer in (a) change if the productive capacity released by not making the seats could be used to produce income of $25,000? (Enter decrease in net income then enter with a negative sign preceding the number or parenthesis, e.g. -15,000 or (15,000).) Net Income Increase (Decrease) Make Buy Total Annual Cost $1180100 ST3350) $1176750 X 21000 Opportunity Cost L 21000 X Total Cost 197750 $7180100 17650 Current Designs should buy the Revolution Seating System. Attempts: 2 of 15 used