AC currently makes the 15,000 ball bearings it uses each year in assembling car wheels. Thee is no other use for these production facilities, nor is there a market for the equipment that makes the ball bearings. DC has just submitted a bed to manufacture the ball bearings for AC at a price of $20 per bearing. If AC no longer makes the ball bearings, the product manager will lose his job. The costs for making one ball bearing are listed as follows:

Direct materials $6

Direct labor $8

Variable overhead $1

Fixed overhead (direct) $5

Fixed overhead (common)$10

Note: 40% of the direct fixed overhead is related to the product manager's salary. The other 60% is unavoidable. Common fixed overhead is unavoidable.

Does it make sense for AC to purchase the ball bearings from DC/ SHOW ALL OF YOUR CALCULATIONS!

Assume that AC has the opportunity to use the ball bearing manufacturing space to increase production of its bicycle tire line. This additional production would generate $65,000 a year in contribution margin. Does it make sense for ACT to purchase the ball bearings from DC, given these changes? SHOW ALL OF YOUR CALCULATIONS!

What 3 nonfinancial considerations could have an impact on the decision to outsource?