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Pharoah Bicycle Company manufactures its own seats for its bicycles. The company is currently operating...

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Accounting

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Pharoah Bicycle Company manufactures its own seats for its bicycles. The company is currently operating at 100% capacity. Variable manufacturing overhead is charged to production at the rate of 60% of direct labor cost. The direct materials and direct labor cost per unit to make the bicycle seats are $8 and $ 9, respectively, Normal production is 56,000 bicydes per year. A supplier offers to make the bicycle seats at a price of $ 21 each. If the bicycle company accepts this offer, all variable manufacturing costs will be eliminated, but the $33,600 of fixed manufacturing overhead currently being charged to the bicycle seats will have to be absorbed by other products, Prepare the incremental analysis for the decision to make or buy the bicycle seats. (Enter negative amounts using elther a negative sign preceding the numbereg.-45 or parentheses eg. (45). Do not leave any field blank. Enter for the amounts.) Net Income Increase (Decrease) Make Buy $ $ $ C sign preceding the numberes 45 or parentheseses (45). Do not leave any field blank. Enter for the amounts:) Net Income Increase (Decrease) Make Buy Should Pharoah Bicycle Company buy the seats from the outside supplier? The seats purchased from the outside supplier

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