A division of the Fraser Limited manufactures parts used in Fraser's products. You have been asked to ascertain whether your division should continue to manufacture a part, T2000, or to buy the part from an outside supplier. The division has received a bit from a vendor, Alpha Corp. to supply the 35,000 units of T-2000 that Fraser Limited will need during 2023, at the price of $20.50 per unit. In comparison, four other suppliers bid at least $23.50 per unit. Alpha guaranteed that the part will be delivered on time and meet Fraser's specifications. The price of $20.50 would only apply to 2023 and would be negotiated for future years. Alpha wishes to enter a long-term supply contract to supply the T-2000 part to Fraser. Alpha was started by an entrepreneur in Richmond in 2021. The following information was provided by Fraser's accounting department concerning the cost of producing 30,000 units of T-2000 during 2022: According to the accounting department, the following estimates were provided: According to the accounting department, the following estimates were provided: - Equipment leasing costs concern special equipment used to manufacture T-2000. The division can terminate the remaining two years of the lease by paying the equivalent of three-months of lease payments. - For manufacturing overhead costs, forty percent is variable, with the balance being fixed. Variable overhead changes with the number of units produced, and this rate per unit is expected to rise by 2% for 2023 . The fixed manufacturing overhead costs are not expected to change whether the division manufactures or purchases the T-2000 part. The division can use equipment other than the leased equipment in its other manufacturing operations. - Direct materials cost used in the production of T-2000 is expected to increase 6 percent in 2023. - The division's direct labor contract contains a 5 percent wage increase for 2023. - The facilities used to manufacture T-2000 are rented under a month-to-month rental agreement. The division would have no need for this space if it does not manufacture T-2000. The division can withdraw from the rental agreement without any penalty. Jack Wilson, the divisional manager, stopped by your office to voice his opinion regarding the outsourcing of the T-200. He commented, "I am really concerned about outsourcing T-2000. I have a son-in-law and a nephew, not to mention a member of our bowling team, who work on T-2000. They could lose their jobs if we buy that component from Alpha. I really would appreciate anything you can do to make sure the cost analysis shows that we should continue making T-2000. Corporate is not aware of materials cost increases and maybe you can leave out some of those costs. I just think we should continue making T-2000." It is now January 2023, and you have been asked to provide advice to the company. 1. Prepare a relevant cost analysis that shows whether the division should make T2000 or purchase it from Alpha for 2023. Specifically: (a) what is the relevant cost per unit to make it and the relevant cost per unit to buy externally? (Round both answers to two (2) decimal places.) (b) What is the total difference in relevant costs between the two alternatives, assuming a volume of 35,000 units? (Round answer to nearest whole dollar.) 2. Identify and briefly discuss the strategic factors that the division should consider in its decision. 3. Do you have any concerns about outsourcing? What do you recommend? 4. Discuss the ethical issues concerning Jack Wilson's request