Nesbitt Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has

offered to make the component at a cost of $$13\mathrm{.}10$ per unit. Nesbitt Enterprises' current cost is $$17\mathrm{.}25$ per unit of the component, based

on the $115,000$ components that Nesbitt Enterprises currently produces.

Read the requirements.

This current cost per unit is based on the following calculations:

$($Click the icon to view the information.$)$

None of Nesbitt Enterprises' fixed costs will be eliminated if the component is outsourced. However, the freed capacity could be

used to build a new product. This new product would be expected to generate $$25,000$ of contribution margin per year.

cost to buy.$)$