help with requirement 3

Casey has received an offer from an outside vendor to supply the upholstery for the chairs Casey requires at $11.00 per chair. The Casey Company produces chairs. This year's expected production is 15,000 units. Currently, Casey makes the upholstery for the chairs in its factory. Casey's management accountant reports the following costs for the upholstery for the 15,000 chairs: (Click to view Read the requirements. information X Data table Direct ma Variable Cost for 15,000 Units Cost per Unit Direct materials $ Variable i handling 5.75 $ 86,250 IN 2.90 43,500 Purchase Variable direct manufacturing labor Variable manufacturing overhead Variable inspection, setup, materials handling 0.95 14,250 Total rele 120,000 70,000 On the bad Allocated fixed costs of plant administration, taxes, and insurance 334,000 Total costs Casey sh Requirement 1. Assume that if the outside vendor supplies the upholstery, the facility where the upholstery is currently made will remain idle. On the basis of financial considerations alone, should Casey accept the outside vendor's offer at the anticipated volume of 15,000 chairs? Show your calculations. (If an input field is not used in the table, leave the input field empty: do not enter a zero.) Relevant Costs Make Buy Direct materials 86250 43500 Direct manufacturing labor Variable manufacturing overhead Variable inspection, setup, materials handling 14250 120000 Purchase cost 165000 165000 Total relevant costs 264000 On the basis of financial considerations alone, should Casey accept the outside vendor's offer at the anticipated volume of 15,000 chairs? Requirement 3. The sales manager at Casey is concerned that the estimate of 15,000 chairs may be high and believes that only 12,000 chairs will be sold. Production will be cut back, freeing up work space. This space can be use to make 10,000 pillows whether Casey buys the upholstery or makes it in-house. On the basis of financial considerations alone, should Casey purchase the upholstery from the outside vendor? Show your calculations. (If an input field is not used in the table, leave the input field empty: do not enter a zero.) Relevant Costs Make Buy Direct materials Direct manufacturing labor Variable manufacturing overhead Variable Inspection, setup, materials handling Purchase cost Total relevant costs On the basis of financial considerations alone, should Casey purchase the upholstery from the outside vendor? Casey purchase the upholstery from the outside vendor. Requirement 3. The sales manager at Casey is concerned that the esumale or is may be nig This space can be use to make 10,000 pillows whether Casey buys the upholstery or makes it in-house. On th vendor? Show your calculations. (If an input field is not used in the table, leave the input field empty; do not er Relevant Costs Make Buy Direct materials Additional contribution margin from selling pillows Additional tooling costs Allocated fixed costs he upholstery from the outside vendor Direct manufacturing labor Direct materials Purchase cost