Make-vs.-buy Great Products Company currently outsources an electrical switch that is a component in one of its products. The switches cost $2.25 each. The company is considering making the switches internally at the following projected annual production costs: 2. Current Last (Inventory balances for component as of December 31) Raw materials inventory Work-in-process (WIP) inventory Finished goods inventory Year S 6,000 S 8,000 $12,000 Year $7,000 $8,500 S9,000 Expenses: Component parts purchased Factory labor- component setup Factory labor-component processing Factory maintenance Component inspection labor Component Equipment depreciation Other MOH costs $ 4,000 to S 500 $3,500 $50,000 $ 1,000 S2,800 $90,000 s 02 02 s 8E08 The company expects an annual need for 5,000 switches. For the year the current year: a) What is Direct Material Cost? b) What is the component production cost per unit? Should the company make or outsource the component? Cost Element Per unit Total Total Make Cost If the company makes the product, it will have to utilize factory space currently being leased to another company for $1,500 a year. Will this information effect the decision to make or buy the component? c) shate blub