Assume that a division of Bose makes an electronic component for its speakers. A small. local company has offered to supply the components at a price of $5.40 Its manufacturing process for the component is a highly automated part of a each. If the division discontinued its production of the component. it would save just-in-time production system. All labor is considered to be an overhead cost, and one half of the supplies cost and $40,000 of indirect-labor cost. All other all overhead is regarded as xed with respect to output volume. Production costs overhead costs would continue. The division manager recently attended a for 115,000 units of the component are as follows: seminar on cost behavior and learned about xed and variable costs. He wants g (Click the icon to View the total production costs for 1 15,000 units.) if: cggtu'git: make the component because the variable 05t 0f $470 is below e . l . Read the uirements. 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 : Allocated occupancy cost :| Purchase cost :| Total relevant costs Direct materials $ 390,000 Factory overhead Indirect labor Supplies Allocated occupancy cost 152.000 $ 542,000 Total cost 1. Compute the relevant cost of (a) making and (b) purchasing the component. Which alternative is less costly and by how much? 2. What qualitative factors might inuence the decision about whether to make or to buy the component