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Assume no beginning inventory Assuming there is excess capacity, what would be the effect on operating income of accepting a special order for 5,300 units
Assume no beginning inventory Assuming there is excess capacity, what would be the effect on operating income of accepting a special order for 5,300 units at a sale price of $44 per product? (NOTE: Assume regular sales are not affected by the special order. Round any intermediary calculations to the nearest cent.) McCall 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 $14.10 per unit. McCall Enterprises' current cost is $17.00 per unit of the component, based on the 100,000 components that McCall Enterprises currently produces. Read the requirements. This current cost per unit is based on the following calculations: (Click the icon to view the information.) . None of McCall 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 $30,000 of contribution margin per year. Data table he Difference Requirement 1. If McCall Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how ! column when the cost to make exceeds the cost to buy.) 5.50 Direct material per unit Make Outsource Incremental Analysis Outsourcing Decision Direct labor per unit 6.50 Component Component Difference 2.00 Variable costs 3.00 Plus: Fixed costs Total cost of 100,000 components Variable manufacturing overhead per unit.. Fixed manufacturing overhead per unit $ Total manufacturing costs per unit 17.00 Less: Profit from another product Net cost Print Done If McCall Enterprises outsources the manufacturing of the component, operating income will by Requirement 2. What is the maximum price per unit McCall Enterprises would be willing to pay if it outsources the component
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