32 Make or Buy Awime that a division of Bose makes an electronic component for its speakers, Its manufactuatit process for the component is a highly automated part of a just-in-time production system. All labor in considered to be an overhead cost, and all overhead is regarded as fixed with respect to output volume. Production costs for 100,000 units of the component are as follows: A small. local company has offered to supply the components at a price of $4,20 each. If the division discontinued its production of the component, it would save two-thirds of the supplies cost and $30,000 of indirect-labor cost. All other overhead costs would continuc. The division manager recently attended a seminar on cost behavior and learned about fixed and variable costs. He wants to continue to make the component because the variable cost of 94.00 is selow the $4.20 bid. 1. Compute the nelevant cost of (a) making and (b) purchasing the component. Which alternive is less costly and by how much? 2. What qualitative factors might infuence the decision about whether to nakc or to buy the component