Direct materials Materials handling (20% of direct material cost) Direct labor Manufacturing overhead Total manufacturing cost $1,000 200 8,000 12,000 $21,200 Materials handling represents the direct variable costs of the receiving department and is applied to direct materials and purchased components on the basis of their cost. This is a separate charge in addition to manufacturing overhead. Zelean's annual manufacturing overhead budget is one-third variable and two-third fixed. Scott Supply, one of Zelean's reliable vendors, has offered to supply part KJ37 at a unit price of $15,000. The fixed cost of producing KJ37 is the cost of a special piece of testing equipment that ensures the quality of each part manufactured. This testing equipment is under a long-term, noncancelable lease. If Zelean were to purchase part KJ37, materials handling costs would not be incurred. Required: a. If Zelean purchases the KJ37 units from Scott, the capacity Zelean was using to manufacture these parts would be idle. Should Zelean purchase the parts from Scott? Make explicit any key assumptions. b. Assume Zelean Manufacturing is able to rent all idle capacity for $25,000 per month. Should Zelean purchase from Scott Supply? Make explicit any key assumptions. c. Assume that Zelean Manufacturing does not wish to commit to a rental agreement but could use idle capacity to manufacture another product that would contribute $52 000 per month Should 7elean manufacture K.137? Make explicit any key assumptions