Make-or-Buy Decision. Vail Door Company currently manufactures doors used in the production of custom homes. Management is interested in outsourcing production of the doors to a reputable manufacturing company that can supply the doors for $90 per unit. Vail incurs the following annual production costs to produce 3,000 doors internally. Total Annual Cost at 3,000 Units Per Unit $30 15 20 $ 90,000 45,000 60,000 Variable production costs Direct materials Direct labor Manufacturing overhead Fixed production costs Factory lease Equipment lease Factory insurance Production supervisor's salary Total production costs 80,000 40,000 25,000 90,000 $430,000 If production is outsourced, all variable production costs and equipment lease costs will be eliminated. The production supervisor's salary cost will remain regardless of the decision to outsource or to produce internally because the supervisor recently signed a long-term contract with the company. The factory lease has five years remaining and cannot be terminated before then. 1. Perform differential analysis. Assume making the product is Alternative 1, and outsourcing is Alternative 2. 2. Which alternative is best? Explain. 3. Assume Vail Door Company can lease the space it currently uses to produce doors for $30,000 per year if production of doors is outsourced. Because the company subleasing this space would also pay for insurance, Vail would not be required to pay for factory insurance. 4. Give 2 Qualitative factors that may influence your decision