The management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier.

All variable manufacturing and direct fixed costs will be eliminated if CISCO is purchased. Allocated costs will have to be absorbed by other production departments.

4. The lowest quotation for 8,000 CISCO units from a supplier is $81,890.

5. If CISCO units are purchased, freight and inspection costs would be $0.35 per unit, and receiving costs totaling $1,260 per year would be incurred by the Machining Department.

(a)Prepare an incremental analysis for CISCO.