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 companys finished product. The following information was collected from the accounting records and production data for the year ending December 31, 2020. 1. 8,000 units of CISCO were produced in the Machining Department. 2. Variable manufacturing costs applicable to the production of each CISCO unit were: direct materials $5.23, direct labor $4.71, indirect labor $0.48, utilities $0.39. 3. Fixed manufacturing costs applicable to the production of CISCO were:

Cost Item		Direct		Allocated
Depreciation		$2,100		$960
Property taxes		500		370
Insurance		910		650
		$3,510		$1,980

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 8,000 CISCO units from a supplier is $86,830. 5. If CISCO units are purchased, freight and inspection costs would be $0.38 per unit, and receiving costs totaling $1,280 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.g. (45).)

Make CISCO Increase (Decrease) Buy CISCO Direct material 41840 0 41840 $ Direct labor 37680 0 37680 Indirect labor 3840 0 3840 Utilities 3120 0 3120 X Depreciation 2100 0 2100 X X Property taxes 500 0 500 x Insurance 910 0 910 > Purchase price 86830 -86830 Freight and inspection 0 3040 -3040 Receiving costs 0 1280 -1280 > Total annual cost 89990 91150 -1160