Arches Manufacturing had always made its components in-house. However, Canyonlands Component Works had recently offered to supply one component, DA, at a price of $12 each. Arches uses 4,600 units of component DA each year. The cost per unit of this component is as follows: Direct materials $7.34 Direct labor Variable overhead Fixed overhead Total 2.42 1.59 4.00 $15.35 The fixed overhead is an allocated expense; none of it would be eliminated if production of component DA stopped. Required: 1. What are the alternatives facing Arches Manufacturing with respect to production of component DA? 2. List the relevant costs for each alternative. If required, round your answers to the nearest cent. Make Buy Differential Cost to Make Total Relevant Cost per unit per unit per unit If Arches decides to purchase the component from Canyonlands, by how much will operating income increase or decrease (as compared to making the component in- house)