Ivanhoe Industries manufactures 90000 digital cameras each year. Ivanhoe has been producing the lenses internally. However, late last year the company received an offer to produce the 157500 lenses the company uses each year for a total contract price of $395000. When Ivanhoe manufactures the lenses internally, direct materials cost $1 per lens, direct labor is $1 per lens, and variable overhead is $0 per lens. Ivanhoe's total overhead is $125000. If the lens were purchased, $38000 of fixed overhead could be avoided. Should Ivanhoe purchase or produce the lenses, and what is the savings associated with the decision? Purchase the lenses and save $7000. Produce the lenses and save $7000. Purchase the lenses and save $42000. Produce the lenses and save $42000. Ivanhoe Industries manufactures 90000 digital cameras each year. Ivanhoe has been producing the lenses internally. However, late last year the company received an offer to produce the 157500 lenses the company uses each year for a total contract price of $395000. When Ivanhoe manufactures the lenses internally, direct materials cost $1 per lens, direct labor is $1 per lens, and variable overhead is $0 per lens. Ivanhoe's total overhead is $125000. If the lens were purchased, $38000 of fixed overhead could be avoided. Should Ivanhoe purchase or produce the lenses, and what is the savings associated with the decision? Purchase the lenses and save $7000. Produce the lenses and save $7000. Purchase the lenses and save $42000. Produce the lenses and save $42000