Outside-is-Cold Inc. must decide whether to make or buy the lining used in its winter coats.
The cost of producing 60,000 linings for its winter coats are as follows.
			Per Unit	Total
	Direct materials		$0.50	$30,000
	Direct labour		0.70	42,000
	Variable overhead		0.75	45,000
	Fixed overhead		1.00	60,000
	Total		$2.95	$177,000
The company has an opportunity to buy the lining from an outside supplier at $2.75 per lining.
If the company purchases the lining, all the variable costs and one third of the fixed costs will
be eliminated.
Required:
(1) Prepare an incremental analysis for the make or buy decision. Show all workings (10 marks)
(2) Should Outside-is-Cold Inc. make or buy the lining? Explain. (2 marks)