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Colden Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc, has offered to make the component at a
Colden 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 $13.00 per unit Colden Enterprises' current cost is $14.50 per unit of the component, based on the 105,000 components that Colden Enterprises currently produces. This current cost per unit is based on the following calculations: View the information. None of Colden 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 $33,000 of contribution margin per year. Read the requirements. Requirement 1. If Colden Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? (Enter a "0" for any zero balances. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy.) Requirements 1. If Colden Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? 2. What is the maximum price per unit Colden Enterprises would be willing to pay if it outsources the component
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