mg its de Use incremental analysis related to make or buy, consider opportunity cost, and identify non-financial factors. P7.2 (LO 3), E Writing The management of Zhou Manufacturing is trying to decide whether to con: tinue manufacturing a part or to buy it from an outside supplier. The part, called CISCO, is a component of the company's finished product. The following information was collected from the accounting records and production data for the year ending December 31, 2020. 1. 8.000 units of CISCO were produced in the Machining Department. 2. Variable manufacturing costs applicable to the production of each CISCO unit were: direct materials HK$48.00, direct labor HK$43.00, indirect labor HK$4.30, utilities HK$4.00. 3. Fixed manufacturing costs applicable to the production of CISCO were: Cost Item Depreciation Property taxes Insurance Direct Allocated HK$21,000 HK$ 9,000 5,000 2,000 9,000 6,000 HK$35,000 HK$17,000 All variable manufacturing and direct fixed costs will be eliminated if CISCO is purchased. Allo- cated costs will have to be absorbed by other production departments. 4. The lowest quotation for 8.000 CISCO units from a supplier is HK$800,000. 5. If CISCO units are purchased, freight and inspection costs would be HK$3.50 per unit, and receiv- ing costs totaling HK$13,000 per year would be incurred by the Machining Department. a. Nl (decrease) HK$(11,600) Instructions a. Prepare an incremental analysis for CISCO. Your analysis should have columns for (1) Make CISCO, (2) Buy CISCO, and (3) Net Income Increase/(Decrease). b. Based on your analysis, what decision should management make? c. Would the decision be different if Zhou Company has the opportunity to produce HK$30,000 of net income with the facilities currently being used to manufacture CISCO? Show computations. d. What non-financial factors should management consider in making its decision? c. Nl increase HK$18,400 TID discorsified industrial-cleaner processing com atau