1. Should Adrenaline continue to buy the turbocharger from Turbo Inc.?

2. Adrenaline is considering renting an additional machine ($50,000 annual rent) that can install the turbocharged engine. The marketing department believes it can sell an additional 100 units, but the market price for the Hyper model will drop to $14,000 per unit. Should Adrenaline rent the additional machine? (Assume that all other costs per unit are the same. Also, answer this question without changing your answer to question 1).

The Adrenaline company manufactures ATVs. Adrenaline manufactures two types of ATVs: Regular and Hyper. The Hyper ATV usm a special Turbo engine, which increases the acceleration and power ot'the engine. Adrenaline produces the engines, but nutscurces the turbocharger from Titrbn, Inc for $5M per unit. Currently, Adrenaline produces and sells d units of its standard model and 40D of its TUIbo model every year. The Hyper model IEq'llit'ES a special machine for installation1 which is operating at capacity. Apart from the engine, the two models are the same and are purchased from a larger ATV manufacturer for $5, each. The data for the two engines units is given below. Regular Hyper Raw Materials $4\") $1,050 [including turbocharger For $500] Labor 2o llI'S @ sat:- 3o l'lJ'S @ $3 Variable verltead Mt] per DLH $30 per ELI-I Fixed UVerhead $50 per am $41) per nLH Market Price S III) [Hill] $1 illll Adrenaline is considering whether to rent a plant for $2i},{} per year to produce the 400 units of the turbocharger instead of purchasing them. The budgeted costs per unit for 4d!) units {not including rem} are as follows: Thermo. System Raw Materials $151} Dimct labor 2 hr @ sat:- Variable l[Itverhead $30 per DLH Fixed Overhead $11] per DLH Capacity lt'} units Adrenaline would have to send the part to its assembly plant at $11} per unit. some 1. Should Adremline continue to buy the turbocharger from Turbo Inc.'? 2. Adrenaline is considering renting an additional machine ($5Illdll} annual rent} that can install the nubocharged engine. The marketing department believes it can sell an additional l units, but the market price for the Hyper model will drop to $14,.DIJIJ per unit. Should Admnaline rem the additional machine? (Assume that all other costs per unit are the same. Also, answer this question without changing your answer to question I}