www vew $3,510 $2,010 All variable manufacturing and direct fixed costs will be eliminated if CISCO is purchased. Alocated costs will have to be absorbed by other production departments. 4. The lowest quotation for 8,100 CISCO units from a supplier is $82,656. s. If CISCO units are purchased, freight and inspection costs would be $0.36 per unit, and receiving costs totaling $1,260 per year would be incured by the Machining Department. Prepare an incremental analysis for CISCO. (If amount decreases net income then enter the amount using either a negative sipn preceding the mumber e.g.-45 or parentheses eg (45)) Net Income Increase- Buy CISCO (Decrease) Make CISCO Direct material Direct labor Indirect labor Utities Depreciation Property taxes Insurance Purchase price Freight and inspection Receiving costs Total annual cost Based on your analysis, what decision should management make The company should Would the decision be different if Ayayai Company has the opportunty to produce s3,000 of net income with the facties currently being used to manufacture CSCO Question Atempts: of 4 used The management of Ayayai 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 reconds and production data for the year ending December 31, 2017 1. 8,100 units of CIsco were produced in the Machiningg Department 2. Variable manufacturing costs applicable to the production of each CISCO unit were direct materials $4.86, direct lsbor $4.40, indirect labor $0.48, utiaties $0.38 3. Fixed manufacturing costs applicable to the production of CISCO were: Allecated Cost Item Direct Depreciation $2,000 $940 Property taxes 550 450 960 620 Insurance $3,510 $2,010 All variable manufacturing and direct fixed costs wil be eliminated if C1SCO is purchased. Alocated costs will have to be absorbed by other production departments. 4. The lowest quotation for 8.,100 CISCO unts from a suppler is $82,656 S. I CISCO unns are purchased, freight and inapection costs would be s0.36 per unt,, and receiving costs totaling $1,260 per year would be inourred by the Machining Department amount decreases net income then enter the amount using either a negative sign preceding the number eg-45 or parentheses eg (48) Prepare an incremental analysis for CISCO. ( Net Inceme Increase (Decrease) Make CISCO auy CISCO Direct material Direct labor Indirect laber Utities Depreciation Property taxes tnsurance Purchase price Freight and inspection Receiving costs Total annual cost