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4.52 Make or Buy, Cost Allocation Freedom Company manufactures medical scooters for people who need assistance in mobility. Facing rising utilities expenses and labour costs, Freedom is contemplating outsourcing the production of one ofts product lines, Free C en Freedom akes 00 un so meeM annual . e cost structure LO3for one unit of FreeMe is as follows: Direct Materials $150 180 Variable Overhead 50 Fixed Overhead 120 Freedom's cost accountant analyzed the fixed overhead and found that several overhead costs are allocated to FreeMe at a rate of40% ofthe toa ofeach overhead cos Freedom's total corporate fixed overhead costs consist of Testing & Inspection, $120,000; Design & Engineering, S180,000; Rent (Factory), S105,000; and Machine-Related Costs, $420,000. In addition, Freedom pays $30,000 per year to rent a warchouse to store the finished product before shipping to customers A Chinese manufacturer offers to produce FreeMe at $450 per unit. A further study of the fixed overhead costs finds that once FreeMe is outsourced, FreeMe will no longer incur the costs for Testing &Inspection. Freedom will be able to reduce the Design & Engineering cost by half, and thus the cost saving will be passed on to FreeMe. The space and machine used for making FreeMe will be freed up to produce other product. However, there is no demand to increase the production of other product lines. REQUIRED A. Calculate the total cost per unit for FreeMe. B. Should Freedom outsource FreeMe? Show calculations to support your answer. C. Suppose there is a demand for other product lines, and the Rent- Factory and Machine related costs allocated to FreeMe now can be allocated to another product line. Should Freedom outsource FreeMe