Montel firm is considering whether to outsource the manufacture of subcomponent JXY. The accounting department provides the following cost information for manufacturing 11000 units of subcomponent JXY per month.

direct material costs: 40 300

direct labour costs: 30 900

variable overhead: 14 800

fixed overhead: 13 800*

* fixed overhead includes 4100$ supervisors salary

International Firm agrees to supply Montel with 11000 units per month for a total cost of 151 600$. If subcomponent JXY is outsourced, Montel will be able to increase the production and sales of its final product by 1150 units per month, the product is sold for 120$ per unit and its average variable costs per unit are 70$. The supervisors salary will be eliminated if subcomponent JXT is outsourced

1) prepare an incremental analysis for subcomponent JXY.

2)Bases on your analysis, what decision should management make? (Complete the sentence)

Management should decide to BUY/MAKE JXY as it would cost an additional $???? If they were to BUY/MAKE the units

3)would the decision be different if Montel has the opportunity to produce and sell 2500 units with the facilities currently being used to manufacture subcomponent JXY,

YES:NO