Manoah Company makes $4,000$ units per year of a part called an axial tap for use in one of its products. Data concerning the unit production costs of the axial tap follow:

Direct Materials $$35$

Direct Labour $$10$

Variable Manufacturing Overhead $$8$

Fixed Manufacturing Overhead $$20$

Total Manufacturing Cost per Unit $$73$

An outside supplier has offered to sell Manoah Company all of the axial taps it requires. If Manoah Company decided to discontinue making the axial taps, $40\%$ of the above fixed manufacturing overhead costs could be avoided. Assume that direct labour is a variable cost.

Required:

$1.$ Assume Manoah Company has no alternative use for the facilities presently devoted to production of the axial taps. If the outside supplier offers to sell the axial taps for $$65$ each, should Manoah Company accept the offer? Fully support your answer with appropriate calculations.

$2.$ Assume that Manoah Company could use the facilities presently devoted to production of the axial taps to expand production of another product that would yield an additional contribution margin of $$80,000$ annually. What is the maximum price Manoah Company should be willing to pay the outside supplier for axial taps?