=+2 For this question, assume that, if the chains are purchased outside, the facilities where the chains are currently made will be used to upgrade the bicycles by adding mud flaps and reflectors. As a consequence, the selling price of bicycles will be raised by $30.

The variable cost per unit of the upgrade would be $24, and additional tooling costs of $100000 would be incurred. On the basis of financial considerations alone, should Ace Ltd make or buy the chains, assuming that 20000 bicycles are produced

(and sold)? Show your calculations.