Instant 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 $13.20 per unit. Instant Enterprises' current cost is $17.00 per unit of the component, based on the 85,000 components that Enterprises currently produces.

Yinf - X Data table st Jed put Jul ct bf 6.00 - ... Direct material per unit $ Direct labor per unit Variable manufacturing overhead per unit .. 7.25 1.50 2.25 Fixed manufacturing overhead per unit $ 17.00 pind In m Total manufacturing costs per unit. e Di ta ng Print Done Requirements 1. If Instant Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? 2. What is the maximum price per unit Instant Enterprises would be willing to pay if it outsources the component? Print Done This current cost per unit is based on the following calculations: (Click the icon to view the information.) None of Instant 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 $25,000 of contribution margin per year