A company currently manufactures a subcomponent that is used in its main product. A supplier has offered to supply all the subcomponents needed at a price of $$25\mathrm{.}50.$ The company currently produces $100,000$ subcomponents at the following manufacturing costs:

Cost per Unit

Direct materials $ $10\mathrm{.}90$

Direct labor $8\mathrm{.}40$

Variable manufacturing overhead $4\mathrm{.}70$

Fixed manufacturing overhead $2\mathrm{.}70$

Total unit cost $ $26\mathrm{.}70$

Required:

If the company has no alternative uses for the manufacturing capacity, what would be the profit impact of buying the subcomponents from the supplier?

If there are no alternative uses for the manufacturing capacity, what would be the maximum price per unit they should be willing to pay the supplier?

Now assume they would avoid $$118,000$ in equipment leases and salaries if the subcomponent were purchased from the supplier. Now what would be the profit impact of buying from the supplier?

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