(Outsourcing) Lincoln Steel Co. produces pickup truck bumpers that it sells on a wholesale basis to new car retailers. The average bumper sales price is $120. Normal annual sales volume is 150,000 units, which is maximum pro¬ duction capacity. At this capacity, the company’s per-unit costs are as follows:

Direct material $42 (including mounting hardware @ $12 per unit)

Direct labor 14 Overhead (2/3 is fixed) 36 Total $92 A key component in producing bumpers is the mounting hardware used to attach the bumpers to the vehicles. Indiana Mechanical has offered to sell Lincoln Steel as many mounting units as the company needs for its bumper production for $16 per unit. If Lincoln Steel accepts the offer, the released facilities currently used to produce mounting hardware could be used to produce an additional 4,800 bumpers. What alternative is more desirable and by what amount? (Assume that the company is currently operating at its ca¬ pacity of 150,000 units.)

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