Issue 2 One of the final stages in the bike manufacturing process is the painting of the bike, referred to as finishing. Management is considering outsourcing the finishing process as a way to add production capacity. SDL has approached XYYZ, a company that specializes in industrial spray painting, to perform the finishing. XYYZ has been in business for five years and has experience painting everything from kitchen cabinets to bicycles. The bikes would be sent to the facility for painting and then sent back to SDL for a quality inspection, packing, and shipping. XYYZ has provided SDL with two customer references, both of whom indicated that they were satisfied with the quality and service they have received from XYYZ. The proposal would be for a three-year term with a minimum volume of 125,000 units annually. XYYZ would charge $30 per unit. Shipping costs, estimated to be $750 per unit, would be SDL's responsibility. SDL has the right to reject any units that do not meet the agreed-upon quality specifications. The controller has provided you with the following per-unit costs for the finishing process: Direct materials Direct labour Variable MOH Fixed MOH* 5.00 Quality inspection 1.50 l * Fixed MOH includes building amortization, insurance. and property taxes. There is one plant supervisor dedicated to overseeing the finishing process. His salary is $75,000, including benefits. The production manager, who earns $100,000 per year, spends approximately 20% of her time dealing with the finishing process. The equipment used in the finishing process has a total cost of $860,000 and is being amortized over eight years. If the finishing were outsourced, the machines could be sold to a used equipment dealer for $60,000. Prepare an analysis of the outsourcing proposal and make an overall recommendation, taking into account both qualitative and quantitative considerations. Assume that 13?,500 units will be produced in a year