Innova uses $1,000$ units of the component IMC$2$ every month to manufacture one of its products. The unit costs incurred to

manufacture the component are as follows.

Overhead costs include variable material handling costs of $$6\mathrm{.}5,$ which are applied to products on the basis of direct material cost

The remainder of the overhead costs are applied on the basis of direct labor dollars and consist of $60\%$ variable costs and $40\%$ fixed

costs.

A vendor has offered to supply the IMC$2$ component at a price of $$200$ per unit.

$($a$)$

Prepare the incremental analysis for the decision to make or buy IMC$2.$ Assume that no fixed costs will be eliminated if production is

outsourced. $($Round answers to $2$ decimal places, e$.$g$.12\mathrm{.}25.$ Enter negative amounts using either a negative sign preceding the number e$.$g$.-45$

or parentheses e$.$g$.(45).)$

Fixed overhead

Purchase price

Total unit cost

Should Innova purchase the component from the outside vendor if Innova's unused facilities remain idle?

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