A small, local company has offered to supply the components at a price of $5.40 each. Ifthe division discontinued its production of the component, it would save one half of the supplies cost and $40,000 of indirect-labor cost. All other overhead costs would continue. The division manager recently attended a seminar on cost behavior and learned about xed and variable costs. He wants to continue to make the component because the variable cost of $4.70 is below the $5.40 bid. Assume that a division of Bose makes an electronic component for its speakers. Its manufacturing process for the component is a highly automated part of a just-in-time production system. All labor is considered to be an overhead cost, and all overhead is regarded as xed with respect to output volume. Production costs for 115,000 units of the component are as follows: a (Click the icon to view the total production costs for 115,000 units.) - -4 u\". .....:......-_s.. Requirement 1. Compute the relevant cost of (a) making and (b) purchasing the component. Which alternative is less costly and by how much? (Leave unused cells blank. Enter the amounts as a positive number.) (a) Make Direct materials Avoidable overhead costs: Indirect labor I: Allocated occupancy cost I: Purchase cost I: Total relevant costs Direct materials $ 390,000 Factory overhead Indirect labor Supplies Allocated occupancy cost 152.000 $ 542,000 Total cost 2. What qualitative factors might influence the decision about whether to make or to buy the component