Marco 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 $12.40 per unit. Marco Enterprises' current cost is $14.25 per unit of the component, based on the 110,000 components that Marco Enterprises currently produces. Read the requirements. This current cost per unit is based on the following calculations: (Click the icon to view the information.) None of Marco 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 $29,000 of contribution margin per year. Requirement 1. If Marco 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.) Incremental Analysis Make Outsource Outsourcing Decision Component Component Difference Variable costs Plus: Fixed costs Total cost of 110,000 components Less: Profit from another product Net cost Requirements 1. If Marco Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? 2. What is the maximum price per unit Marco Enterprises would be willing to pay if it outsources the component? Get more help Print Done Data table Direct material per unit.. 4.25 Direct labor per unit. 5.50 Variable manufacturing overhead per unit.. 2.75 1.75 Fixed manufacturing overhead per unit 14.25 Total manufacturing costs per unit . . . . . . . . Print Done Snipping Tool New Mode Delay Cancel Select the snip mode using the Mode button or click the New button. Snipping Tool is moving... In a future update, Snipping Tool will be moving to a new home. Try improved features and snip like usual with Snip & Sketch (or try the shortcut Windows logo key + Shift + S). Try Snip & Sketch Options answer