Part U$67$ is used in one of Broce Corporation's products. The company's Accounting Department reports the following

costs of producing the $16,200$ units of the part that are needed every year.

Direct materials

Direct labor

Variable overhead

Supervisor's salary

Depreciation of special equipment

Allocated general overhead

Per Unit

$$3\mathrm{.}10$

$$4\mathrm{.}10$

$$6\mathrm{.}90$

$$7\mathrm{.}40$

$$8\mathrm{.}50$

$$5\mathrm{.}60$

An outside supplier has offered to make the part and sell it to the company for $$30\mathrm{.}00$ each. If this offer is accepted,

the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used

to make the part was purchased many years ago and has no salvage value or other use. The allocated general

overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $$22,200$ of

these allocated general overhead costs would be avoided.

Required:

a$.$ Prepare a report that shows the financial impact of buying part U$67$ from the supplier rather than continuing to make

it inside the company.

b$.$ Which alternative should the company choose?

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Required B

Prepare a report that shows the financial impact of buying part U$67$ from the supplier rather than continuing to make it

inside the company.