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Oriole Bicycle Company manufactures its own seats for its bicycles. The company is currently operating at 1 0 0 % capacity. Variable manufacturing overhead is
Oriole Bicycle Company manufactures its own seats for its bicycles. The company is currently operating at
capacity. Variable manufacturing overhead is charged to production at the rate of of direct labor cost. The direct
materials and direct labor cost per unit to make the bicycle seats are $ and $ respectively. Normal production is
bicycles per year.
A supplier offers to make the bicycle seats at a price of $ each. If the bicycle company accepts this offer, all variable
manufacturing costs will be eliminated, but the $ of fixed manufacturing overhead currently being charged to
the bicycle seats will have to be absorbed by other products.
a
Prepare the incremental analysis for the decision to make or buy the bicycle seats. Enter negative amounts
using either a negative sign preceding the number eg or parentheses eg Do not leave
any field blank. Enter for the amounts.
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