E8-27A (similar to) Question HD This ment cost per unit is based on the following calculations: Click the loon to view the information) Parrot Enterprises manufactures one of the components used to assembleits main company product Specialty Products, Inc., has offered to make the component at a cost of $12.00 per unit. Pwrrot Enterprises current cost is $13.75 per unit of the component based on the 130,000 components that Parrot Enterprises currently produces Read the requirements. None of Parrot Enterprises' fed costs will be eliminated the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to genere $25,000 of contribution margin per year. Outsource Component 1,638,000 $ Component 1,625,000 Difference Data Table 5 13,000 Incremental Analysis Outsourcing Decision Variable costs Plus Fbed costs Total cost of 130,000 components Loss Profit from another product 1,625,000 $ 1.638.000 $ 25.000 1,613.000 $ 13,000 25,000 12.000) 1,625,000 5 Direct material per unit Direct labor per unit Variable manufacturing overhead per Fixed manufacturing overhead porn Total manufacturing costs per unit Nel cos I Parrot Enterprises outsources the manufacturing of the component operating income will create by 12,000 Requirement 2. What is the maximum price per unit Parrot Enterprises would be willing to pay it outsources the component? Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit Costil making 130.000 components Variable costs Food costs Cost outsourcing 130,000 components Variable costs. Found costs Using the basic formula you determined above solve for the indifferent outsourcing cost per unit. (Round your answer to the newest cont, SXXX) The maximum price per unit Parrot Enterprises would be willing to pay if it outsources the component is $ Enter any number in the edit fields and then click Check Answer Check Answer E8-27A (similar to) Parrot Enterprises manufactures one of the components used to assemblait main company product Specialty Products, Inc., has offered to make the component at a cost of $12.50 per unit. Parrot Enterprises current cost is $13.75 per unit of the component based on the 130,000 components that Parrot Enterprises currently produces Read the requirements This current cost per unit is based on the following a ltion Click the loon to view the information) None of Parrot Enterprises fed costs will be inated the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $25,000 of contribution margin per year. Incremental Analysis Outsourcing Decision Component 1,625 000 Outsource Component 1638,000 $ Difference 13000 Requirements 1 Variable costs $ $ Plus: Foxed costs Total cost of 130,000 components Less: Profit from another product $ 1.625,000 $ $ 1,638,000 25.000 1,613,000 13.000 25,000 1. Parret Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? What is the maximum price per unit Panot Enterprises would be willing to pay it outsources the component? 2 $ 1,625,000 5 $ (12.000) Net cost If Parrot Enterprises outsources the manufacturing of the component operating income wil increase by $ 12,000 Done Requirement 2. What is the maximum price per unit Parrot Enterprises would be willing to pay if outsources the component? Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit Cost making 130.000 components - Cost outsourcing 130,000 components Variable costs + Fixed costs Varihe costs Feed costs Using the basic formula you determined above solve for the indifferent outsourcing cost per unit (Round your answer to the nearest cent, SXXX) The maximum price per unit Parrot Enterprises would be willing to pay if it outsources the component is $ her in the fields and then click Check
