1 IMF Machining Company is now making a WIDGET that is used in one of its products. The company's accounting department reports the following unit costs of producing the WIDGET internally. The company makes 10,000 WIDGETS per year. Per Unit (based on current production levels) Direct materials $15 Direct labor 10 Variable manufacturing overhead 2. Fixed manufacturing overhead 10 Unit product cost $37 The fixed manufacturing overhead cost consists of the following: 40% is common plant-wide allocated costs, and 60% consists of a production manager's salary that could be eliminated if production of the WIDGET were discontinued. Assume that direct labor is a variable cost (ALWAYS). An outside supplier has offered to sell the WIDGET to IMF for $35 each, based on an order of 10,000 WIDGETS per year. Should IMF accept this offer, or continue to make the WIDGET internally? Solve the following: a) Determine the relevant per unit cost to make the WIDGET b) Determine the TOTAL savings or additional cost of outsourcing the WIDGETS. c) If IMF could make a different product - the GIDGET in the space that is now used to make the WIDGET and it could earn a $40,000 profit by doing so, would it be beneficial to outsource the WIDGET? Why? d) List 2 QUALITATIVE factors that IMF should consider about the GIDGET specifically before it decides to make it. Do some thinking here. 1. 2