Boston Exemcutive, Inc., produces executive limousines and currently manufactures the mini-bar inset at these costs: Cost per Unit Variable costs: Direct material Direct labor $960 660 Variable overhead 310 Total variable costs. $1,930 Fixed costs: Depreciation of equipment $510 Depreciation of building 200 Supervisors salaries 300 $1,010 $2,940 Total fixed costs Total cost The company received an offer from Elite Mini-Bars to produce the insets for $2,130 per unit and supply 900 mini-bars for the coming year's estimated production. If the company accepts this offer and shuts down production of this part of the business, production workers and supervisors will be reassigned to other areas. Assume that for the short-term decision-making process demonstrated in this problem, the company's total labor costs (direct labor and supervisor salaries) will remain the same if the bar inserts are purchased. The specialized equipment cannot be used and has no market value. However, the space occupied by the mini-bar production can be used by a different production group that will lease it for $55,000 per year. A. Calculate the differential cost of mini-bar insert. If an amount box does not require an entry, leave it blank. Cost of Making 900 Bar Inserts Cost of Buying 900 Bar Inserts Differential Cost (Savings) A. Calculate the differential cost of mini-bar insert. If an amount box does not require an entry, leave it blank. Cost of Making 900 Bar Inserts Cost of Buying 900 Bar Inserts Differential Cost (Savings) Variable Costs Direct material Direct labor Variable overhead 864,000 594,000 864,000 594,000 X 279,000 V 279,000 1,737,000 594,000 X 1,143,000 X Fixed Costs Equipment depreciation 459,000 459,000 Building depreciation 180,000 180,000 Supervisor salaries 270,000 V 270,000 X 909,000 909,000 X Other Cost Savings Leased space Cost of buying bar inserts Total cost 55,000 1,917,000 1,862,000 55,000 1,917,000 1,862,000 V 2,646,000 3,365,000 719,000 X