Parrot Enterprises manufactures one of the components used to assemble its main company product. This current cost per unit is based on the following calculations: Specialty Products, Inc., has offered to make the component at a cost of $12.60 per unit. Parrot (Click the loon to view the information Enterprises' current cost is $13.75 per unit of the component, based on the 130,000 components that Parrot Enterprises currently produces None of Parrot Enterprises fred costs will be eliminated if the component is outsourced. However, Read the requirements the freed capacity could be used to build a new product. This new product would be expected to generate $25,000 of contribution margin per year. Requirement 1. If Parrot Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? (Enter a "U" for any zero balances. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy.) i Data Table Make Component Outsource Component Difference Incremental Analysis Outsourcing Decision Variable costs Plus: Fixed costs Total cost of 130,000 components Less: Profit from another product Direct material per unit 6.25 Variable manufacturing overhead per unit Fixed manufacturing overhead per unit Netcost Total manufacturing costs per unit 13.75 Print Done E8-27A (similar to) This current cost per unit is based on the following calculations (Click the loon to view the information) Parrot 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 $12.60 per unit. Parrot Enterprises' current cost is $13.75 per unit of the component, based on the 130,000 components that Parrot Enterprises currently produces Read the requirements. None of Parrot Enterprises' fed costs will be eliminated the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $25,000 of contribution margin per year. Requirement 1. If Parrot Enterprises outsources the manufacturing of the component, wil operating income increase or decrease? By how much? (Entra "O for any zero balances. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy) Make A Requirements Incremental Analysis Outsourcing Decision Outsource Component Component Variable costs Plus: Fixed costs Total cost of 130,000 components Less: Profit from another product 1. Parrot Enterprises outsources the manufacturing of the component, wil operating income increase or decrease? By how much? 2. What is the maximum price per unit Parrot Enterprises would be willing to pay if it outsources the component? Net cost Print Done