Pierce Firetrucks is a$$ large$-$scale manufacturer of fire trucks for local fire departments. Throughout the$$ years, they have consistently manufactured all components for their trucks$$ in$-$house. Recently, they have found a vendor for the chassis of the firetruck that would be willing to sell them the chassis for$$ $$8,250.$ After gathering information from the accounting$$ department, management has found the following with regard to the current cost levels when producing$2,500$ trucks.

Direct Materials: $$10,000,000$

Direct Labor: $$15,000,000$

Management has also identified that manufacturing overhead costs incurred over the same period for the production of the chassis is represented by the following cost behavior$$ equation: Y$=$ $$50$X$+$ $$5,000,000.$

If the part were to be$$ outsourced, $10\%$ of total fixed manufacturing overhead would be$$ eliminated, and the facilities freed up could be rented out to generate$$ $$650,000$ in rental income to offset any additional costs from outsourcing the product.

Assuming that$3,500$ units will need to be produced next$$ year, which of the following statements is$$ incorrect?

Question $8$ options:

In addition to the quantitative aspects of the$$ analysis, Pierce should also consider the qualitative aspects in order to make sure that outsourcing the chassis makes sense for the$$ company's strategy.

At a purchase price of$$ $$10,250,$ the cost to make is less than the cost to buy.

If Pierce decides to outsource the production of the$$ chassis, operating income will increase by$$ $$7,450,000.$

The total cost to make the part$$ in$-$house next year is$$ $$40,175,000.$

At a purchase price of$$ $$10,378\mathrm{.}57($rounded$),$ Pierce would be indifferent between making and outsourcing the chassis.