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2. (10 pts) Each year, Ace Inc. purchases 8,000 units of a part. The supplier notified Ace that a price increase will take effect shortly,
2. (10 pts) Each year, Ace Inc. purchases 8,000 units of a part. The supplier notified Ace that a price increase will take effect shortly, which will bring the price of the part to $25 each. Ace is considering the use of idle facilities to produce the part. The annual production costs for the 8,000 parts are as follows: Direct materials $17,500 Direct labor 30,000 Indirect production costs - variable 14,000 Indirect production costs - fixed 33,500 The idle facilities could also be rented out at an annual rent of $99,000. All the fixed indirect production costs are avoidable. Should Ace buy the part, produce it internally, or buy it and rent the facility
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