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Requirement 1. If Parrot 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.) Outsource Make Component Component Difference Incremental Analysis Outsourcing Decision Variable costs Plus: Fixed costs Total cost of 80,000 components Less: Profit from another product Net cost If Parrot Enterprises outsources the manufacturing of the component, operating income will by s Requirement 2. What is the maximum price per unit Parrot Enterprises would be willing to pay if it outsources the component? Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit. Cost if making 80,000 components Cost if outsourcing 80,000 components Using the basic formula you determined above solve for the indifferent outsourcing cost per unit. (Round your answer to the nearest cent, $X.XX.) The maximum price per unit Parrot Enterprises would be willing to pay if it outsources the component is $ per unit i X Data Table 5.25 5.75 Direct material per unit.. $ Direct labor per unit..... Variable manufacturing overhead per unit Fixed manufacturing overhead per unit .... $ Total manufacturing costs per unit. 2.25 1.75 15.00 Print Done Requirement 1. If Parrot 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.) Outsource Make Component Component Difference Incremental Analysis Outsourcing Decision Variable costs Plus: Fixed costs Total cost of 80,000 components Less: Profit from another product Net cost If Parrot Enterprises outsources the manufacturing of the component, operating income will by s Requirement 2. What is the maximum price per unit Parrot Enterprises would be willing to pay if it outsources the component? Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit. Cost if making 80,000 components Cost if outsourcing 80,000 components Using the basic formula you determined above solve for the indifferent outsourcing cost per unit. (Round your answer to the nearest cent, $X.XX.) The maximum price per unit Parrot Enterprises would be willing to pay if it outsources the component is $ per unit i X Data Table 5.25 5.75 Direct material per unit.. $ Direct labor per unit..... Variable manufacturing overhead per unit Fixed manufacturing overhead per unit .... $ Total manufacturing costs per unit. 2.25 1.75 15.00 Print Done

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