The management of Sham Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called QWERT, 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, 2022:

a) The machining department produced 7,600 units of QWERT during the year.

b) Variable manufacturing costs applicable to the production of each QWERT unit were direct materials $4.90, direct labour $4.30, indirect labour $0.43, and utilities $0.34.

c) Fixed manufacturing costs applicable to the production of QWERT were as follows:

Cost Item	Direct	Allocated	Total
Depreciation	$1,910	$900	$2,810
Property taxes	540	105	645
Insurance	920	560	1,480
	$3,370	$1,565	$4,935

The company will eliminate all variable manufacturing and direct fixed costs if it purchases QWERT. Allocated costs will have to be absorbed by other production departments. So if QWERT is purchased, the fixed manufacturing costs allocated to QWERT will have to be absorbed by other production departments.

d) The lowest quotation for 7,600 QWERT units from a supplier is $75,544.

e) If QWERT units are purchased, freight and inspection costs would be $0.45 per unit, and the machining department would incur receiving costs totalling $1,310 per year.

1) Prepare an incremental analysis for QWERT. (If an amount reduces the net income then enter with a negative sign preceding the number, e.g.-15,000 or parenthesis, e.g. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.)

2) Based on your analysis, what decision should management make?

The company should _______ QWERT.

3) Would the decision be different if Shamrock had the opportunity to produce $2,750 of net income with the facilities currently being used to manufacture QWERT? (If an amount reduces the net income then enter with a negative sign preceding the number, e.g.-15,000 or parenthesis, e.g. (15,000).)