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 materials $20 /unit Direct labor Variable overhead $15 /unit Fixed overhead $15 /unit $20,000 Current Designs will need to produce 3,150 seats this year; 22% 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 $54 to purchase a seat from an outside vendor. (a) ZYour answer has been saved and sent for grading. See Gradebook for score details. 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 63,000 0 63,000 $ $ Direct Labor 47,250 0 0 47,250 Variable Manufacturing Costs 47,250 0 47,250 Fixed Manufacturing Costs 20,000 15,600 4,400 Purchase Price 0 0 170,100 (170,100) Total Annual Cost 177,500 185,700 (8,200) $ $ Current Designs should make the Revolution Seating System. (b) Would your answer in (a) change if the productive capacity released by not making the seats could be used to produce income of $21,000? (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 $ Opportunity Cost Total Cost $ $ Current Designs should the Revolution Seating System. Click if you would like to Show Work for this question: Open Show Work