follows:

An outside supplier has offered to sell the company all of these parts it needs for $$42\mathrm{.}70$ a unit. If the company accepts this offer, the facilities $9$ now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $$32,200$ per year.

If the part were purchased from the outside supplier, $$8\mathrm{.}00$ of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.

$11$

$12$ Required:

$13$ Should Foto Company continue to make the product or buy it from the outside supplier? $(5$ marks$)$

Sheet$1$

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