Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Current Designs faces a mumber of important decisions that require incremental analysis. One of Current Designs' competitive advantages is found in the ingenuity of its

image text in transcribed
image text in transcribed
image text in transcribed
Current Designs faces a mumber 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 quicily 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. Current Designs will need to produce 3,050 seats this year; 30% 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 $56 to purchase a seat from an outside vendor: 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, eg, 15,000 or (15,000)] Current Designs should the Revolution Seating System. Would your answer in (a) change if the productive capacity released by not making the seats could be used to produce income of $22,000 ? (Enter decrease in net income then enter with a negative sign preceding the number or porenthesis, eg, 15,000 or (15,000).) Current Designs should the Revolution Seating System

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditors Letter Handbook

Authors: American Bar Association Business Law Section

2nd Edition

161438973X, 978-1614389736

More Books

Students also viewed these Accounting questions