ABC manufactures a line of room air purifiers. Assume that management is currently evaluating the possible production of an air purifier for automobiles. Based on an annual volume of $50,000$ units, the predicted cost per unit of an auto air purifier follows:

Direct materials $$2\mathrm{.}50$

Direct labor $$2\mathrm{.}00$

Factory overhead $$12\mathrm{.}00$

Total costs $$16\mathrm{.}50$

These cost predictions include $$450,000$ in fixed factory overhead, averaged over $50,000$ units.

Also, assume the completed air purifier units include a battery$-$operated electric motor, which ABC assembles with parts purchased from an outside vendor for $$2\mathrm{.}00$ per motor. Mini Motor Company has offered to supply an assembled battery$-$operated motor at a cost of $$5\mathrm{.}25$ per unit, with a minimum annual order of $5,000$ units. If ABC accepts this offer, it will be able to reduce the variable labor and variable overhead costs of the auto air purifier by $50\%.$

Required

a$.$ Determine whether ABC should continue to make the electric motor or outsource it from Mini Motor Company. $($Hint: Analyze the relevant costs of making the $$motors$,$ not the entire air purifier.$)$

b$.$ If it could otherwise rent the motor assembly space for $$50,000$ per year, should it make or outsource this component?

c$.$ What additional factors should it consider in deciding whether to make or outsource the electric motors?