Please show work!

Woodchuck is considering outsourcing the production of upholstered chair pads that it currently sells with some of its wooden chairs. The pads sell for $14 each. Padalong Company recently offered to manufacture 1000 chair pads for Woodchuck at a price of $9 each. Woodchuck has the following information about the costs it incurs to manufacture a chair pad: Direct Materials Direct Labor Variable Overhead Total Variable Costs $4 per pad $2 per pad $2 per pad $8 per pad Fixed overhead (based on production of 1000 pads) $3 per pad Woodchuck has determined that all variable costs would be eliminated if the pads are outsourced to Padalong. However, the fixed costs are expected to continue if the pads are outsourced. 1. Based on the above information should Woodchuck make or buy the chair pads? 2. Suppose that Woodchuck could use the space currently used in manufacturing chair pads to make a new product. How much profit must this new product line generate in order for Woodchuck to be indifferent between making the chair pads or buying these from Padalong