Easyuse Tool Co. manufactures an electric motor that it uses in several of its products. Management is considering whether to continue manufacturing the motors or to buy them from an outside source. The following information is available, 1. The company needs 12,000 motors per year. The motors can be purchased from an outside supplier at a cost of $21 per unit. 2. The unit cost of manufacturing the motors is $35, computed as follows. $ 8 10 Direct materials Direct labor Factory overhead: Variable Fixed (based on 12,000 units) 7.50 9.50 3. Discontinuing the manufacture of motors will eliminate all the raw materials and direct labor costs but will eliminate only 75 percent of the variable factory overhead costs. 4. If the motors are purchased from an outside source, machinery used in the production of motors will be sold at its book value. Accordingly, no gain or loss will be recognized. The sale of this machinery would also eliminate $6,000 in fixed costs associated with depreciation and taxes. No other reductions in fixed