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 $12.40 per unit. Parrot Enterprises' current cost is $17.00 per unit of the component, based on the 115,000 components that Parrot Enterprises currently produces. This current cost per unit is based on the following calculations: (Click the on to v ew the information. None of Parrot Enterprises' fixed costs will be eliminated if the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $26,000 of contribution margi por year Read the roquirements Requirement 1. If Parrot Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? (Enter a "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.) Requirements Incremental Analysis Make Outsourcing Decision Variable costs Plus: Fixed costs Total cost of 115,000 components Less: Profit from another product Net cost 1. If Parrot Enterprises outsources the manufacturing of the component, wil operating income increase or decrease? By how much? What is the maximum price per unit Parrot Enterprises would be willing to pay if it outsources the component? 2. PrintDone Data Table Direct material per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit 6.25 6.25 2.75 1.75 S 17.00 Enter any number in the edit fields and then click Check Answer Total manufacturing costs per unit Check Answer remaining