This Nesbitt Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has offered to make the component at a cost of $12.90 per unit. Nesbitt Enterprises' current cost is $17.25 per unit of the component, based on the 80,000 components that Nesbitt Enterprises currently produces. None comp to buf Requirements If Nesbitt Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? What is the maximum price per unit Nesbitt Enterprises would be willing to pay if it outsources the component? This current cost per unit is based on the following calculations: (Click the icon to view the information.) Nesbitt Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has offered to make the component at a cost of $12.90 per unit. Nesbitt Enterprises' current cost is $17.25 per unit of the component, based on the 80,000 components that Nesbitt Enterprises currently produces. Read the requirements. None of Nesbitt Enterprises' fixed costs will be eliminated if the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $26,000 of contribution margin per year. Requirement 1. If Nesbitt Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? (Enter a "0" for any zero balances. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy.) Make Outsource Incremental Analysis Outsourcing Decision Component Component Difference Variable costs Plus: Fixed costs Total cost of 80,000 components Less: Profit from another product Net cost This Nesbitt Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has offered to make the component at a cost of $12.90 per unit. Nesbitt Enterprises' current cost is $17.25 per unit of the component, based on the 80,000 components that Nesbitt Enterprises currently produces. None comp to buf Requirements If Nesbitt Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? What is the maximum price per unit Nesbitt Enterprises would be willing to pay if it outsources the component? This current cost per unit is based on the following calculations: (Click the icon to view the information.) Nesbitt Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has offered to make the component at a cost of $12.90 per unit. Nesbitt Enterprises' current cost is $17.25 per unit of the component, based on the 80,000 components that Nesbitt Enterprises currently produces. Read the requirements. None of Nesbitt Enterprises' fixed costs will be eliminated if the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $26,000 of contribution margin per year. Requirement 1. If Nesbitt Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? (Enter a "0" for any zero balances. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy.) Make Outsource Incremental Analysis Outsourcing Decision Component Component Difference Variable costs Plus: Fixed costs Total cost of 80,000 components Less: Profit from another product Net cost
