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 $4.51, direct labor $4.74, indirect labor $042, utilities $0.37 3. Fixed manufacturing costs applicable to the production of CISCO were: Cost Item Direct Allocated Depreciation $2,100 $940 Property taxes 500 390 Insurance 590 $3,540 $1.920 940 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 $81.698. 5.1 CISCO units are purchased, freight and inspection costs would be $0.36 per unit, and receiving costs totaling $1,300 per year would be incurred by the Machining Department. Net Income Increase (Decrease) Make CISCO Buy CISCO Direct material 38400 Direct labor 34400 Indirect labor 3440 38400 3200 34400 Utilities Depreciation 3500 3440 Property taxes 3200 Insurance 3500 80000 -30000 Purchase price Freight and inspection Receiving costs 2800 2800 1300 -1300 Total annual cost $ 82940 $ 84100 $ - 1160