Part #1 Part #2 Part #3 Part #4 Any help with these 4 questions would be greatly

Question

Part #1

Part #2

Part #3

Part #4

Any help with these 4 questions would be greatly appreciated!

MAKE OR BUY NIKE has been approached by Hickman Laces to outsource the laces for the "Speed" product line of basketball sneakers. NIKE could buy the laces from Hickman Laces for 1,500,000. Information regarding NIKE's cost to produce the laces in-house is provided below. If NIKE outsources, it can avoid $250,000 of fixed cost. What is the change in Net Operating Income if NIKE buys (outsources) the laces for its Speed basketball sneakers? Thus, should NIKE outsource or continue to make the laces in-house? $375,000.00 DM DL MOH Variable MOH-Fixed $450,000.00 $400,000.00 $1,525,000.00 Change in NOI $ Mark an "X" to indicate whether NIKE should... Outsourse OR Continue to Make in-house

Explanation / Answer

Part-1 Incremnetal analysis: Incremental revenue in form of savings in cost Material 375000 labour 300000 Variable MOH 450000 1,125,000 Less: Incremental cost of outsourcing -1,500,000 Net decreasse in net income -375000 Change in NOI ($375,000) Hence, No outsourcing Part-2 Incrementtal revenue generated for adding profits 20 (69-49) Less: Incremental cost of adding pockets 16 Net increase in Net income 4 Change in NOI /unit $4 hence, Add the Pocket Part-3 Incremental analysis of dropping the FLASH: Loss of revenue -3,000,000 Less: savings in cost Variable cost 1,560,000 Traceable Fixed cost (1800,000*55%) 990000 Net decrease in income -450,000 Hence, Should not be dropped Part-4 Arspikes Blasters Crushers Selling price 55 45 75 Less: vraiable cost 30 30 55 Contribution margin per unit 25 15 20 Divide: machine hour per unit 3 1.5 4 Contribution margin per hour 8.33 10 5 Ranking II I III First preference Blasters Third preference Airspikes

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