Wildhorse Company manufactured 7,800 units of a component part and incurred direct materials costs of $78,000 and variable overhead costs of $39,000. It has the option to purchase the component part from another company for $13 per unit or use its factory equipment to produce another product estimated to contribute $28,600 in margin. An incremental analysis report should be prepared to inform Wildhorse's make or buy decision for the component part.

1. Wildhorse Company manufactured 7,800 units of a component part that is used in its product
and incurred the following costs: Another company has offered to sell the same component part
to the company for $13 per unit. The fixed manufacturing overhead consists mainly of
depreciation on the equipment used to manufacture the part and would not be reduced if the
component part was purchased from the outside firm. If the component part is purchased from
the outside firm, Wildhorse Company has the opportunity to use the factory equipment to
produce another product which is estimated to have a contribution margin of $28,600. Prepare an
incremental analysis report for Wildhorse Company which can serve as informational input into
this make or buy decision. (Enter negative amounts using either a negative sign preceding the
number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter 0