Fanning Bike Company makes the frames used to build its bicycles. During Year 2, Fanning made 21,000 frames; the costs incurred follow. Unit-level materials costs (21,000 units x $48) $ 1, 008, 000 Unit-level labor costs (21,060 units x $50) 1, 050, 000 Unit-level overhead costs (21,000 x $13) 273, 000 Depreciation on manufacturing equipment 94, 080 Bike frame production supervisor's salary 82, 300 Inventory holding costs 250,000 Allocated portion of facility-level costs 500,000 Total costs $ 3, 257, 300 Fanning has an opportunity to purchase frames for $115 each. Additional Information 1. The manufacturing equipment, which originally cost $500,000, has a book value of $420,000, a remaining useful life of four years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $60,000 per year. 2. Fanning has the opportunity to purchase for $920,000 new manufacturing equipment that will have an expected useful life of four years and a salvage value of $93,800. This equipment will increase productivity substantially, reducing unit-level labor costs by 60 percent. Assume that Fanning will continue to produce and sell 21,000 frames per year in the future. 3. If Fanning outsources the frames, the company can eliminate 80 percent of the inventory holding costs. Required a. Determine the avoidable cost per unit of making the bike frames, assuming that Fanning is considering the alternatives of makinga. Determine the avoidable cost per unit of making the bike frames, assuming that Fanning is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Fanning outsource the bike frames? b. Assuming that Fanning is considering whether to replace the old equipment with the new equipment, determine the avoidable cost per unit to produce the bike frames using the new equipment and the avoidable cost per unit to produce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if the company uses new equipment. c. Assuming that Fanning is considering whether to purchase the new equipment or outsource the bike frame, calculate the impact on profitability between the two alternatives. es Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the avoidable cost per unit of making the bike frames, assuming that Fanning is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Fanning outsource the bike frames? Note: Round your answer to 2 decimal places. Show less A Avoidable cost per unit for making the product per unitc. Assuming that Fanning is considering whether to purchase the new equipment or outsource the bike frame, calculate the impact profitability between the two alternatives. Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the avoidable cost per unit of making the bike frames, assuming that Fanning is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Fanning outsource the bike frames? Note: Round your answer to 2 decimal places. Show less A Avoidable cost per unit for making the product per unit Should Fanning outsource the bike frames? Required A Required B >c. Assuming that Fanning is considering whether to purchase the new equipment or outsource the bike frame, calculate the profitability between the two alternatives. Complete this question by entering your answers in the tabs below. Required A Required B Required C Assuming that Fanning is considering whether to replace the old equipment with the new equipment, determine the avoidable cost per unit to produce the bike frames using the new equipment and the avoidable cost per unit to produce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if the company uses new equipment. Note: Round "Avoidable cost per unit" to 2 decimal places. Show less A Old Equipment New Equipment Avoidable cost per unit Profit will byc. Assuming that Fanning is considering whether to purchase the new equipment or outsource the bike frame, calculate profitability between the two alternatives. Complete this question by entering your answers in the tabs below. Required A Required B Required C Assuming that Fanning is considering whether to purchase the new equipment or outsource the bike frame, calculate the impact on profitability between the two alternatives. Note: Do not round intermediate calculations. Should Fanning purchase new equipment or outsource? Profit must by Required B Required C >