Answer:
The preparation of an incremental analysis is given below
Explanation:
The preparation of an incremental analysis is shown below:
Particulars Make Buy Net Income - Increase/(Decrease)
Variable Manufacturing Cost
(10,300 × $5) $51,500 - $51,500
Fixed Manufacturing Cost
(10,300 × $3) $30,900 $30,900 -
Purchase Price (10,300 × 6) - $61,800 $(61,800)
Total Annual Cost $82,400 $92,700 $(10,300)
By above calculation, we can interpret that the marigold should make the part as it would became cheaper but it also saves the cost of $10,300
