Isner Bearings Inc. makes two bearings, B100 and B200 for use in its own production. Data regarding these two bearings follow:

B100 B200 Machine hours required per unit 2.5 3.0 Cost per unit: Direct material $2.25 $3.75 Direct labor $4.00 $4.50 Manufacturing overhead Variable $2.00 $2.25 Fixed $3.75 $4.50 Total $12.00 $15.00 Isner's annual demand for B100 and B200 are 8,000 units and 11,000 units respectively. The company has only 41,000 machine hours to devote to the production of these bearings. This capacity would be idle if not used for these two bearings. An outside company has offered to sell Precision its annual supply of the two bearings at prices of $11.25 for B100 and $13.50 for B200. Required 1. How many units of each bearing should Isner outsource and/ or produce in house? What would be the net saving/cost relative to completely outsourcing the two bearings? B100 B200 Units to be outsourced Units to be produced in-house Net saving/cost relative to completely outsourcing the two bearings: 2. Answer this question independent of Part 1 of this question above. Suppose Precision wants to drop B100. Assume that 41,000 available machine hours has a traceable, avoidable fixed cost of $44,000, which would be incurred if any amount of this available capacity of 41,000 hours is used. (This is the fixed cost of jigs, dies and other items required to make B200 internally). What is the maximum price Isner should agree to pay the supplier for B200? Maximum Price Isner should agree to pay the supplier for B200