Make-or-Buy, Tradidenal Analyeis Garcia Company produces two different types of gavges: a density gauge and a thickness gavge. The segmented income statement for a typical quarter follows: The density gavge uses a subassembly that is purchased from an external supelier for $25 per unit, Each quarter, 1,820 subassemblles are purchased, All units produced are sold, and there are no ending inventories of subassemblies. Gardia is considering making the subassembly rather than buying it. Unit-level variable manufacturing costs are as follows No significant non-unit-level costs afe incurfed. Garda is considering two alternatives to supply the productive capacity for the subassembly. 1. Lease the needed seace and equipenent at a cost of $24,570 per quarter for the space and $9,100 pes quarter for a supervisoc. There are no other fixed expensos. 2. Drop the thickness gauge. The equipment could be adapted with virtually no cost and the existing space utilized to produce the subassembly, The direct fixed expenses, induding supervision, would be $34,580,$7,280 of which is depreciation on equipment. If the thickness gave is dropped, sales of the density gauge will not be atfected. Required: 1. Should Garda Company make of buy the subassembly? If it makes the subassembly, which alternativi should be chosen? Enter the relevant costs of each alternative. 2. Suppese that drociping the thickness gauge Wil decrease syes of the densify oyege by to nercent. What dedsian should now be made