P7-ZB The management of Finnigan Manufacturing Company is trying to decide whether Use incremental analysis to continue manufacturing a part or to buy it from an outside supplier. The part, called related to make or buy; BIZBE, is a component of the company's nished product. comider DQPOP'WW')' 605$ The following information was collected from the accounting records and produc- and \"3me \"onmmm'r tion data for the year ending December 31. 2011. factors. 30 :1 1. 6,000 units of BIZBE were produced in the Machining Department. ( ) 2. Variable manufacturing costs applicable to the production of each BIZBE unit were: direct materials $4.75, direct labor $4.60, indirect labor $0.45, utilities $0.35. 3. Fixed manufacturing costs applicable to the production of BIZBE were: Cost Item Direct Allocated Depreciation $ 1 , 1-00 $ 900 Property taxes 500 200 Insurance 900 600 $2,500 $ 1 .700 All variable manufacturing and direct fixed costs will be eliminated if BIZBE is pur chased. Allocated costs will have to be absorbed by other production departments. - The lowest quotation for 6,000 BIZBE units from a supplier is $66,000. - If BIZBE units are purchased, freight and inspection costs would be $0.30 per unit, and receiving costs totaling $750 per year would be incurred by the Machining Department. ' Instructions 3) I'll idEDfESE} ($5.155) (a) Prepare an incremental analysis for BIZBE. Your analysis should have columns for (1) Make BIZBE, (2) Buy BIZBE, and (3) Net Income Increase/Decrease. (b) Based on your analysis, what decision should management make? 1:] ill increase $350 (c) Would the decision be different if Finnegan Company has the opportunity to pro- duce $6,000 of net income with the facilities currently being used to manufacture BIZBE? Show computations. ' . b What nonfinancial factors should management con31der in making its decision? (d) :_. \"Inn-m