1. If Electroexperts Inc. buys the part, its fixed costs will reduce by 5% and the variable costs will be scrapped off. Perform incremental analysis and determine whether Electroexperts Inc. should buy the part or continue making the part?

Unit manufactured$5,000Direct materials cost$30,000Direct labor cost$40,000Fixed costs$20,000Variablecosts$10,000

a. Electroexperts Inc. has received a special marketing choice from one of the world's electronic suppliers. The suppliers want to sell to Electroexperts Inc. a certain electronic component for $18 per unit. Currently Electroexperts Inc. makes the part and its management is seriously considering the buying choice.If Electroexperts Inc. buys the part, its fixed costs will reduce by 5% and the variable costs will be scrapped off. Perform incremental analysis and determine whether Electroexperts Inc. should buy the part or continue making the part?

b.If Electroexperts Inc. buys the part, its fixed costs will reduce by 60% and the variable costs will reduce by 95%. Perform incremental analysis and determine whetherElectroexperts Inc. shouldbuy the part or continue making the part?