8.1 Manufacturing Company incurs the following costs each year to make 5,000 units of a component part Direct labor Direct materials Variable overhead Fixed overhead Total Costs $50,000 $75,000 $20,000 $30,000 $175,000 The company president would like to purchase the parts from an outside supplier that offers to sell them for $32 each. Manufacturing Company's fixed overhead consists of $10,000 of allocated or indirect fixed costs and $20,000 of avoidable or direct fixed costs. A. Should Manufacturing Co. purchase the part from the outside supplier? How much would it save or cost Manufacturing Co? Show your calculations. B. Manufacturing Company has the option to rent a machine for $12,000 a year that improves the quality of the product while simultaneously cutting direct labor costs by 30% per unit. As a result of the improved quality, it is expect that sales will increase and Manufacturing Co. will need 6,000 units of the component part (instead of 5,000). Should Manufacturing Company rent the machine or buy from the outside supplier? How much money will it save or cost? Show your calculations