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I need help with this exercise to study and practice on the subject Exercise I. Make or buy. Make or Buy Decision Tommy Company produces

I need help with this exercise to study and practice on the subject

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Exercise I. Make or buy. Make or Buy Decision Tommy Company produces (makes - makes) the part used in the manufacture of one of its products. The costs associated with the production of 11,000 units follow: Direct material - direct material $25,000 Direct labor - Direct labor 34,000 Variable Costs variable manufacturing costs 65,000 Fixed Costs 50,000* Total Make-up $ 174,000 *Of the fixed manufacturing costs, $9,000 is avoidable. Buy Offer: One supplier, List Manufacturing offers to make the 11,000 pieces to Tommy Company with the same quality at $12.50 per unit; for a total of $137,500. Required: Determine the fixed cost irrelevant to the decision. Explain what it means. 2. How much savings would Tommy Company experience if you purchased the parts from List Manufacturing? 3. If you are Tommy's manager, what decision would you make, make them or compare them? 4. Would your answer change if the company could rent the space dedicated to making the piece for $10,000, if you decide to buy them? Show calculations. 5. Indicate some qualitative factors to support your decision

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