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Splish Firm is considering whethar to cutsource the manufacture of subcomponent DXY. The accounting department provides the following cost information for manufacturing 10,700 units of
Splish Firm is considering whethar to cutsource the manufacture of subcomponent DXY. The accounting department provides the following cost information for manufacturing 10,700 units of subcomponent JXY per month. "Fixed averhead includes $4,200 supervisor's salary. Intemational Firm agrees to supply Splish with 10,700 units per month for a tatal cast of $119,700. If subcomponent JXY is outsourced, Splish will be able to increase the production and sales af its final product by 1,040 units per manth; the product is sold for $100 per unit and its average variable casts per unit are $00. The supervisor's salary will be eliminated if subcompanent JXY is cutsourced. (a) Prepare an incremental analysis for subcomponent JXY. (If an amount reduces the incremental costs then enter with a negative sign preceding the number e.g. 15,000 or parenthesis, eg. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem]
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