Coronado Inc. has been manufacturing its own shades for its table lamps. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 55% of direct labour costs. The direct materials and direct labour costs per unit to make the lampshades are $4.90 and $6.00, respectively. Normal production is 48,600 table lamps per year. A supplier offers to make the lampshades at a price of $14.50 per unit. If Coronado Inc. accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $40,300 of fixed manufacturing overhead currently being charged to the lampshades will have to be absorbed by other products.

umber of units: 48,600 Purchase price Variable manufacturing overhead. Fixed manufacturing overhead. 11 Direct materials Direct labour Direct materials. $ Make $ Buy $ Net In Increase (I