E$7-8$: Innova uses $1,000$ units of the component IMC$2$ every month to manufacture one of its products. The unit costs

incurred to manufacture the component are as follows.

Overhead costs include variable material handling costs of $$6\mathrm{.}50,$ which are applied to the products on the basis of

material costs. The remainder of the overhead costs consist of $60\%$ variable costs and $40\%$ fixed costs.

A vendor has offered to supply the IMC$2$ component at a price of $$200$ per unit.

a$)$ Should Innova purchase the component from the outside vendor if Innova's capacity remains idle and fixed costs can't be avoided?

Accept $$

Reject $$

a$)$ Should Innova purchase the component from the outside vendor if it can use its facilities to manufacture another product?

What information will Innova need to make an accurate decision? Show your calculations.