1 Alanco, Inc. manufactures a variety of products and is currently maunfacturing all of its own component parts. 2 An outside supplier has offered to sell one of those components to Alanco. To evaluate this offer, the following 3 information has been gathered relating to the cost of producing the component internally: 4 5 Direct materials 6 Direct labor 7 Variable manufacturing overhead 8 Fixed manufacturing overhead, traceable* 9 Fixed manufacturing overhead, common but allocated 10 Total cost 11 12 Supplier price 13 $ 21.00 $ 4.00 6.00 2.00 5.00 8.00 S 25.00 14 Units used per year 12,000 15 16 *Fixed manufacturing overhead, traceable is composed of two items: 17 Depreciation of equipment (no resale value) 30% 18 19 Supervisor salary 20 1. Assuming the company has no alternative use for the facilities now being used to produce the 21 component, complete the following analysis to determine if the outside supplier's offer should be accepted. 70%