Case1: Incremental Analysis:

you are a financial manager for Zoom Corp., which manufactures bicycles. In the most recent fiscal year,

9 10 >> 11 12 13 14 15 >> 16 17 18 7 Instructions 8 >> Enter your name and Access ID ('aa1234' format) in the cells above. The data required for this case will not appear until you do so. You are a financial manager for Zoom Corp., which manufactures bicycles. In the most recent fiscal year, Zoom manufactured and sold 20,000 bicycles. Wheels, seats, and brake calipers are three components of the bicycles currently manufactured by Zoom. Three different vendors have proposed to provide those components to Zoom, and quoted prices (including shipping) for their delivery. Your task is to determine which, if any, of these proposals should be accepted. Prepare a make vs. buy incremental analysis for each possible course of action in an Excel worksheet. Your grade will be based on the correctness of your answers, as well as the use of Excel. That is, where possible, you should use formulas to get your answers, rather than keyed-in values. See your instructor for help with Excel basics if you need it. 19 >> In a Word document, prepare a memo stating which of the proposals you suggest accepting, as well as the basis for your conclusions. Also identify any nonfinancial factors you should consider before accepting any 21 of the outsourcing proposals. Attach both files to the Canvas assignment space by the due date of March 18th 23 24 25 Below is cost data for Zoom's production of wheels, seats, and calipers. Outside suppliers have offered to 26 provide wheels for $7.26, seats for $7.76, and calipers for $2.55 per piece. Both wheels and seats are branded 27 with the Zoom logo, and that logo will need to be added at the Zoom factory at a cost of $0.50 each for any 28 of these components that are outsourced. For all three components, 75% of the fixed costs are avoidable, and 29 will be eliminated if the component's production is outsourced. In addition, seats and calipers are both 30 produced out of the same small factory space. If both seats and calipers were outsourced, Zoom could lease 31 space out and increase net income by $6,000 per year, while eliminating all fixed costs for the two 32 components. 33 20 22 >> the Wheels Seats Calipers Cost category Direct materials Direct labor Variable overhead Fixed overhead Total cost $138,000 $57,000 $90,000 97,000 69,000 42,000 21,000 14,000 16,000 58,600 36,600 34,400 $314,600 $176,600 $182,400 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Units produced Cost per unit 40,000 $7.87 20,000 $8.83 80,000 $2.28 Hints: Prepare incremental analyses for each component separately. Make wheels vs. buy wheels, etc. Since there are additional implications to outsourcing both seats and calipers, do a make vs. buy analysis assuming both are outsourced. A correct solution, then, will likely have at least four incremental analyses. You may use the second tab of this workbook to prepare your solutions, or create a new file. Since you will be attaching this file to the Canvas assignment page, there are no file naming conventions you need to observe