i be need help wtih 7-9 please.

EXERCISE 7-8. Make-or-Buy Decision [LO 1] The Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below: Cost per Unit Variable costs Direct material $950 Direct labor 650 Variable overhead 300 Total variable costs $1,900 Fixed costs Depreciation of equipment 500 Depreciation of building 200 Supervisory salaries 300 Total fixed costs 1,000 Total cost $2,900 The company has an offer from Duvall Valves to produce the part for $2,100 per unit and supply 1,000 valves (the number needed in the coming year). If the company accepts this offer and shuts down production of valves, production workers and supervisors will be reassigned to other areas where, unfortunately, they really are not needed. The equipment cannot be used elsewhere in the

company, and it has no market value. However, the space occupied by the production of the valve can be used by another production group that is currently leasing space for $55,000 per year. REQUIRED Should the company make or buy the valve? EXERCISE 7-9. Sunk, Avoidable, and Opportunity Costs [LO 1] Consider the information in Exercise 7-8 and identify the following statements as true or false. salary is an avoidable cost if the company decides to buy the valves. b. Depreciation of building is an avoidable cost if the company decides to buy the valves. c. The $55,000 cost of leasing space is an opportunity cost associated with continuing production of the valve. d. The depreciation of equipment is an opportunity cost associated with continuing production of the valve. e. Depreciation of building is a sunk cost even if the company continues with production of the valve. f.Supervisory salary is a sunk cost even if the company continues with production of the valve