Barber Manufacturing currently makes 2,000 units of gas-powered leaf blowers each year. However, the company has found a manufacturing company that can provide the blowers at a price of $14 each. The company is considering purchasing the blowers. If the company purchases the blower, the machine can be used to produce 5,000 units of another product that would generate a contribution of $2 per unit. There will be no need of supervisor if Barber goes for outsourcing. Barbers standard cost for a blower is listed below.

Direct Material... $4

Direct labor.. 2

Variable cost 3

Fixed Cost

Depreciation .....3

CEOs Salary2

Supervisors salary (directly connected with blower) ..4

Cost per unit $18

Required:

1. Should Barber purchase the blower outside or make it at his own.
2. List five ways that management can seek to relax a constraint by expanding the capacity of a bottleneck operation.