$ 4.60 Direct materials Direct labor Manufacturing overhead 1.00 1.20 Total cost $ 6.80 The costs above include costs for producing both the lip balm and the tube that contains it. As an alternative to making the tubes, Silven has approached a supplier to discuss the possibility of purchasing the tubes for Chap-Off. The purchase price of the empty tubes from the supplier would be $1.40 per box of 4 tubes. If Silven Industries accepts the purchase proposal, direct labor and variable manufacturing overhead costs per box of Chap-Off would be reduced by 10% and direct materials costs would be reduced by 20%. Required: 1. Should Silven Industries make or buy the tubes? Show calculations to support your answer. 2. What would be the maximum purchase price acceptable to Silven Industries 3. Instead of sales of 100,000 boxes, revised estimates show a sales volume of 122,000 boxes. At this new volume, additional equipment must be acquired to manufacture the tubes at an annual rental of $40,000. Assume that the outside supplier will not accept an order for less than 122,000 boxes, should Silven Industries make or buy the tubes? Sow computations to support your answer. 4.Refer to the data in (3) above. Assume that the outside supplier will accept an order of any size for the tubes at $1.40 per box. How, if at all, would this change your answer? Show computations