Climate-Control, Inc., manufactures a variety of heating and air-conditioning units. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a thermostat to Climate-Control for $31 per unit. To evaluate this offer, Climate-Control, Inc., has gathered the following information relating to its own cost of producing the thermostat internally:

		Per Unit		15,700 Units per year
Direct materials	$	9	$	141,300
Direct labor		11		172,700
Variable manufacturing overhead		2		31,400
Fixed manufacturing overhead, traceable		6*		94,200
Fixed manufacturing overhead, common, but allocated		13		204,100
Total cost	$	41	$	643,700

*40% supervisory salaries; 60% depreciation of special equipment (no resale value).

Required:

1a.	Assuming that the company has no alternative use for the facilities now being used to produce the thermostat, compute the total cost of making and buying theparts.(Enter "0" wherever required. Round your Fixed manufacturing overhead per unit rate to two decimal places in intermediate calculations.)
	Per Unit Differential Costs 15700 Units Make Buy Make Buy Cost of Purchasing Direct materials Direct labor Variable manufactoring overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead common Total costs Difference in favor of making (buying)

1b.	Should the outside supplier's offer be accepted?
	Reject Accept

2a.	Suppose that if the thermostats were purchased, Climate-Control, Inc., could use the freed capacity to launch a new product. The segment margin of the new product would be$117,620 per year. Compute the total cost of making and buying theparts.(Round your Fixed manufacturing overhead per unit rate to two decimals.)
	Make Buy Cost of purchasing Cost of making Opportunity cost-segment margin forgone on a potential new product line Total cost Difference in favor of making (buying)

2b.	Should Climate-Control, Inc., accept the offer to buy the thermostats from the outside supplier for $31 each?
	Accept Reject