The management of Bridgeport 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, 2017. 1. 7,900 units of CISCO were produced in the Machining Department 2. Variable manufacturing costs applicable to the production of each CISCO unit were: direct materials $5.11, direct labor $4.54, indirect labor $0.46, utilities $0.41 3. Fixed manufacturing costs applicable to the production of CISCO were: Cost Item Direct Allocated Depreciation $2,000 $880 470 Property taxes 430 Insurance 910 660 $3,380 $1,970 All variable manufacturing and direct fixed costs will be eliminated if CISCO is purchased. Allocated costs will have to be absorbed by other production departments 4. The lowest quotation for 7,900 CISCO units from a supplier is $83,562 5. If CISCO units are purchased, freight and inspection costs would be $0.34 per unit, and receiving costs totaling $1,270 per year would be incurred by the Machining Department. "(a) Your answer is partially correct. Try again. Prepare an incremental analysis for CISCO. (If amount decreases net in come then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Your answer is partially correct. Try again. Prepare an incremental analysis for CISCO. (If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase Make CISCO Buy CISCO (Decrease) Direct material s40369 s40369 Direct labor 135866 35866 3634 3239 Indirect labor 3634 Utilities 3239 Depreciation 2000 Property taxes 470 Insurance 1910 Purchase price 83562 F83562 Freight and inspection 2686 F2686 Receiving costs 1270 F1270 sF1030 86448 87518 Total annual cost Attempts: 5 of 15 used /b) The management of Bridgeport 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, 2017. 1. 7,900 units of CISCO were produced in the Machining Department 2. Variable manufacturing costs applicable to the production of each CISCO unit were: direct materials $5.11, direct labor $4.54, indirect labor $0.46, utilities $0.41 3. Fixed manufacturing costs applicable to the production of CISCO were: Cost Item Direct Allocated Depreciation $2,000 $880 470 Property taxes 430 Insurance 910 660 $3,380 $1,970 All variable manufacturing and direct fixed costs will be eliminated if CISCO is purchased. Allocated costs will have to be absorbed by other production departments 4. The lowest quotation for 7,900 CISCO units from a supplier is $83,562 5. If CISCO units are purchased, freight and inspection costs would be $0.34 per unit, and receiving costs totaling $1,270 per year would be incurred by the Machining Department. "(a) Your answer is partially correct. Try again. Prepare an incremental analysis for CISCO. (If amount decreases net in come then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Your answer is partially correct. Try again. Prepare an incremental analysis for CISCO. (If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase Make CISCO Buy CISCO (Decrease) Direct material s40369 s40369 Direct labor 135866 35866 3634 3239 Indirect labor 3634 Utilities 3239 Depreciation 2000 Property taxes 470 Insurance 1910 Purchase price 83562 F83562 Freight and inspection 2686 F2686 Receiving costs 1270 F1270 sF1030 86448 87518 Total annual cost Attempts: 5 of 15 used /b)
