Show Attempt History Current Attempt in Progress Your answer is partially correct. The management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called CISCO, is a component of the company's finished product. The following information was collected from the accounting records and production data for the year ending December 31, 2020. 1.8,100 units of CISCO were produced in the Machining Department 2. Variable manufacturing costs applicable to the production of each CISCO unit were: direct materials $4.86, direct labor $4.40, indirect labor $0.48, utilities $0.38. 3. Fixed manufacturing costs applicable to the production of CISCO were: Cost Item Depreciation Property Direct Allocated $2,000 $940 550 taxes 450 Insurance 960 620 $3.510 $2,010 Question 5 of 5 1.37/6 E All variable manufacturing and direct fixed costs will be eliminated if CISCO is purchased. Allocated costs will not be eliminated if CISCO is purchased. So if CISCO is purchased, the fixed manufacturing costs allocated to CISCO will have to be absorbed by other production departments 4. The lowest quotation for 8,100 CISCO units from a supplier is $82,656. 5. If CISCO units are purchased, freight and inspection costs would be $0.36 per unit, and receiving costs totaling $1,260 per year would be incurred by the Machining Department (a) Prepare an incremental analysis for CISCO. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e... (45).) Net Income Increase (Decrease) Make CISCO Buy CISCO Direct material $ 38400 $ 38400 Direct labor 34.400 34,400 Indirect labor 3440 i 3440 Utilities 3200 3200 Depreciation 3000 900 3000 Lecture practice Question de sages Pogotor 1 mental Analysis 1.37/6 Question 5 of 5 38400 38400 5 Direct material 34,400 34.400 Direct labor 3440 Indirect labor 3440 i 3200 Utilities 3200 Depreciation 3000 3000 900 Property taxes 700 200 700 Insurance 1500 600 900 Purchase price 80000 -80000 Freight and inspection 2800 -2800 Receiving costs 1300 - 1300 Total annual cost 84640 85800 $ - 1160 (b) Based on your analysis, what decision should management make? The company should buy CISCO (c) Would the decision be different if Shatner Company has the opportunity to produce $3,000 of net income with the facilities currently being used to manufacture CISCO?" Yes eTextbook and Media