Make-or-Buy Decision Zion Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $25 each. Zion uses 10,000 units of Component K2 each year. The cost per unit of this component is as follows: Direct materials Direct labor Variable overhead Fixed overhead $12.00 8.25 4.50 2.00 $26.75 Total The fixed overhead is an allocated expense; none of it would be eliminated if production of Component K2 stopped Required 1. What are the alternatives facing Zion Manufacturing with respect to production of Component K2? Make the component in-house or to buy it from Bryce 2. List the relevant costs for each alternative. If required, round your answers to the nearest cent Total Relevant Cost Make Buy Differential Cost to Make 11.32 X per unit 12 X per unit -0.68 X per unit If Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease? Decrease 112,500X