Click or there to enter tot Question 2: (20 marks) Dyson company produces air-purifier fan B177 model. This model is the best seller with expected annual sales of 20,000 units. Each B117 fan has a thermostat component which enable the fan to automatically work upon a pre-set temperature. The company has always produced the thermostat componentintemally, but the general manager is considering purchasing this component from an extemal supplier. b) What other (non-fin mcial) factors should management consider in maling this make-or-buy decision? [6 marks Click or tips here to enter text The purchase decision would eliminate all variable costs but some of the fixed costs. Allocated costs will have to be absorbed by other production departments. Variable manufacturing costs to produce each thermostat component were: Direct materials per unit Direct labour per unit: Indirect labour per unit: Utilities per unit: $6 $4.80 $0.66 50.60 Fixed manufacturing costs to produce each thermostat component were: Cost item Direct Allocatai Depreciation 53,300 $2,700 Property taxe 5600 Insurance $2,850 $1,350 Pyson currently receives an offer from Flurry Ltd. to purchase a simlar thermostat component with the following information: 1. The lowest quotation for 15,000 unit of thermostat componentis $196,000 2. freight and inspection costs would be $0.40 per unit; receiving costs of $2,800 per year would be incurred by Pyson. 3. If the thermostat components are purchased on an ongoing basis, one of Pyson's manufacturing plants would be closed. The facilities would be rented out to produce a net income of $18,000 per year. 4. If the thermostat components are purchased on an ongoing basis, a machine operator from the plant will be transferred to the purchasing department (the employee's salary is $40,000). Required: a) Should Pyson Company continue to make the thermostat or purchase the part from the external supplier? Justify your answer with an appropriate incremental analysis. Activate Go to Settir [14 marks]