Exercise 13-15 Make-or-Buy Decision OBJECTIVE 2 Zion Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $25 each. Zion uses 10,000 units of component K2 each year. The cost per unit of this component is as follows: Direct materials Direct labour Variable overhead Fixed overhead Total $12.00 8.25 3.50 2.00 $25,75 Assume that 75 percent of Zion Manufacturing's fixed overhead for component K2 would be eliminated if that component were no longer produced Required: CONCEPTUAL CONNECTION If Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease? Which alternative is better? 2/10 points Question 5 Complete Exercise 13-15 and answer the following questions. Remember to enter numeric amounts without a $ or (a comma). If the answer is $20,000.00, then enter the number as 20000. Remember to round to 2 decimal places. For numbers such as 1.456, round up to 1.46 and for numbers such as 1.452, round down to 1.45 Required: The per unit cost to make the component in-house is $ 24.75 (Round this number to the nearest penny.) The per unit cost to buy the component is $ 25 Zion should (buy, make) the component because operating income will be increased by $ make if the part is made (made, purchased). D View Feedback