(Make-or-Buy) Swan Manufacturing needed to determine if it would be cheaper to make 20,000 units of a component, which is used in production of an equipment, in-house or to purchase them from an outside supplier for $4.00 each. Cost information on internal production includes the following (for 20,000 units per month):

	Total cost	Unit Cost
Direct Materials	34.000	1.7
Direct Labor	24.000	1.2
VAriable Overhead	12.000	0.6
Fixed Overhead	50.000	2.5
total	120.000 dollars	6 dollars

Fixed overhead will continue whether this component is produced internally or purchased from a supplier. No additional costs of purchasing will be incurred beyond the purchase price. Required: 1. What are the alternatives for Swan Manufacturing? 2. List the relevant cost(s) of internal production and of external purchase. 3. Which alternative is more cost effective and by how much? 4. Now assume that the fixed overhead includes $15,000 of cost that can be avoided if the component is purchased externally. Which alternative is more cost effective and by how much?