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This current cost per unit is based on the following calculations (Click the icon to view the information) Parrot Enterprises manufactures one of the components

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This current cost per unit is based on the following calculations (Click the icon to view the information) Parrot Enterprises manufactures one of the components used to be main company product. Special Products, Inc., has offered to make the component a cost of $12.50 per unit Parrot Enterprises current cost is $13.75 per unit of the component based on the 130,000 components that Parrot Enterprises currently produces Read the requirements None of Parrot Enterprises' fed costs will be eliminated the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $25,000 of contribution margin per year. Requirement 1. Parrot Enterprises outsources the manufacturing of the component will operating income increase or decrease? By how much? (Entra parentheses in the Derence column when the cost to make exceeds the cost to buy) for any zero balances. Us i ns signo Wake Incremental Analysis Outsourcing Decision Variable costs Outsource Component Data Table Component Plus Fored costs Total cost 130.000 components Direct material per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit Les Prothrom another product 125 Netcost 13.75 Total manufacturing costs per unit Print Done Parrot Enterprises manufactures one of the components used to assemble is main company product. This current cost per unit is based on the following calculations Specialty Products, Inc., has offered to make the component at a cost of $12.50 per unit. Parrot Enterprises current cost is $13.75 per unit of the component based on the 130.000 components that Click the icon to view the information) Parrot Enterprises currently produces None of Parrot Enterprises fand costs will be eliminated the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to Read the requirements generale $25,000 of contribution margin per year. Requirement 1. If Parrot Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? (Enter a "O" for any zero balances. Use a minus sign parentheses in the Difference column when the cost to make exceeds the cost to buy) Outsource Component Requirements Component Incremental Analysis Outsourcing Decision Variable costs Plus: Fixed costs Total cost of 130,000 components 1. Parrot Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? 2. What is the maximum price per unit Parrot Enterprises would be willing to pay it outsources the component? Less: Profit from another product Netcost Print | Done / This current cost per unit is based on the following calculations (Click the icon to view the information) Parrot Enterprises manufactures one of the components used to be main company product. Special Products, Inc., has offered to make the component a cost of $12.50 per unit Parrot Enterprises current cost is $13.75 per unit of the component based on the 130,000 components that Parrot Enterprises currently produces Read the requirements None of Parrot Enterprises' fed costs will be eliminated the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $25,000 of contribution margin per year. Requirement 1. Parrot Enterprises outsources the manufacturing of the component will operating income increase or decrease? By how much? (Entra parentheses in the Derence column when the cost to make exceeds the cost to buy) for any zero balances. Us i ns signo Wake Incremental Analysis Outsourcing Decision Variable costs Outsource Component Data Table Component Plus Fored costs Total cost 130.000 components Direct material per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit Les Prothrom another product 125 Netcost 13.75 Total manufacturing costs per unit Print Done Parrot Enterprises manufactures one of the components used to assemble is main company product. This current cost per unit is based on the following calculations Specialty Products, Inc., has offered to make the component at a cost of $12.50 per unit. Parrot Enterprises current cost is $13.75 per unit of the component based on the 130.000 components that Click the icon to view the information) Parrot Enterprises currently produces None of Parrot Enterprises fand costs will be eliminated the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to Read the requirements generale $25,000 of contribution margin per year. Requirement 1. If Parrot Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? (Enter a "O" for any zero balances. Use a minus sign parentheses in the Difference column when the cost to make exceeds the cost to buy) Outsource Component Requirements Component Incremental Analysis Outsourcing Decision Variable costs Plus: Fixed costs Total cost of 130,000 components 1. Parrot Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? 2. What is the maximum price per unit Parrot Enterprises would be willing to pay it outsources the component? Less: Profit from another product Netcost Print | Done /

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