m Pearson company is a farm equipment manufacturer that produces rotary lawnmower that are the most versatile type and will cope with most types of grass. They are better than cylinder mowers at cutting longer and rougher grass. A rotary mower may be powered by mains electric, rechargeable battery or petrol engine Annual sales have been 100,000 wagons per year. The retail selling price of each wagon is $67.00. To date, AlexCo has produced each of the components used in making the wagons but has been approached by DAL, Inc. with an offer to provide the axle and wheel assembly for $18.75 per assembly. AlexCo's costs to produce the axle and wheel assembly are $9.00 in direct materials, $6.50 in direct labor, $3.57 in variable overhead, and $2.50 in fixed overhead. Twenty-five percent of the fixed overhead is avoidable if the assembly is produced by DAL. Rotary lawn mowers Should AlexCo continue to make the axle and wheel assembly or should it buy the assembly from AL, Inc.? The manufacturing overhead of $4.00 per unit includes both variable and fixed manufacturing overhead, based on a production of 100,000 units each year. Find the differential cost of two options. Should Pearson Company accept the outside supplier's offer