Part U67 is used in one of ABC Corporation's products. The company's Accounting Department reports the following costs of producing the 16,600 units of the part that are needed every year. Per Unit Direct materials $3.80 Direct labor $4.50 Variable overhead $7.50 Supervisor's salary $8.20 Depreciation of special equipment $8.80 Allocated general overhead $5.80 An outside Vietnamese supplier has offered to make the part and sell it to the company, including shipping, for $31.00 each. Even though the supplier is fairly new to the market, they boost the latest equipment, a strong management team and are gaining a name for themselves in the market place. In fact, rumour suggests they have successfully secured a contract with your competitor. Currently, ABC relies on internal manufacturing to provide the U67 part. If this offer is accepted, the supervisor's salary and all ofthe 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 $22,600 ofthese allocated general overhead costs would be avoided. Required: 8. Prepare a report that shows the nancial impact of buying part U67 from the supplier rather than continuing to make it inside the company. b. Which alternative should the company choose? c. To be answered in the next Connect question provide a qualitative analysis. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside the company. $ 63,080 74,700 124,500 136,120 Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead 22,600 514,600 $ 514,600 Outside purchase price Total cost $ 421 ,000 Required B ) Required: a. Prepare a report that shows the nancial impact of buying part U67 from the supplier rather than continuing to make it inside the company. b. Which alternative should the company choose? c. To be answered in the next Connect question provide a qualitative analysis. Complete this question by entering your answers in the tabs below. Required A Required B Which alternative should the company choose? Qualitative Analysis c. Referring to the previous question, provide a qualitative analysis (2 pros and 3 cons) of working with the outside supplier. (5 marks) Short Answer Toolbar navigation BIUS E