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. 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 $5.08, direct labor $4.15, indirect labor $0.41, utilities $0.44.

3. Fixed manufacturing costs applicable to the production of CISCO were:

Cost ItemDirectAllocatedDepreciation$1,900$910Property taxes540340Insurance920580$3,360$1,830

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 7,900 CISCO units from a supplier is $79,899.

5. If CISCO units are purchased, freight and inspection costs would be $0.37 per unit, and receiving costs totaling $1,270 per year would be incurred by the Machining Department.

(a) Prepare ann incremental analysis for CISCO. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Make CISCOBuy CISCONet Income

Increase

(Decrease)Direct material$enter direct material in dollars $enter direct material in dollars $enter direct material in dollars Direct laborenter direct labor in dollars enter direct labor in dollarsenter direct labor in dollarsIndirect laborenter indirect labor in dollars enter indirect labor in dollarsenter indirect labor in dollarsUtilitiesenter utilities in dollars enter utilities in dollarsenter utilities in dollarsDepreciationenter depreciation in dollarsenter depreciation in dollarsenter depreciation in dollarsProperty taxesenter property taxes in dollarsenter property taxes in dollarsenter property taxes in dollarsInsuranceenter insurance in dollarsenter insurance in dollarsenter insurance in dollarsPurchase priceenter the purchase price in dollarsenter the purchase price in dollarsenter the purchase price in dollarsFreight and inspectionenter freight and inspection in dollarsenter freight and inspection in dollars enter freight and inspection in dollarsReceiving costsenter receiving costs in dollarsenter receiving costs in dollars enter receiving costs in dollarsTotal annual cost$enter total annual cost in dollars $enter total annual cost in dollars $enter total annual cost in dollars