Problem #1 -Make or Buy Analysis (10 Points) Mountain Goat Cycles is now producing the heavy duty gear shifters used in its most popular pular line of producing mountain bikes. The company's accounting department reports the following costs of 8,000 units of the shifter internally each year: 8,000 Units per year 12 Per Unit Direct materials Direct labor Variable manufacturing overhead Supervisor's Salary Depreciation of special equipment Allocated general overhead Total cost 96,000 64,000 16,000 48,000 32,000 80,000 336,000 ice of 10 $ 42 $ An outside supplier has offered to sell 8,000 shifters a year to Mountain Goat Cycles at a pr only $38 each. Should the company stop producing the shifters internally and buy them from the outside supplier? . Focus should be on the relevant costs-those that differ between alternatives Equipment has no salvage value and it has no other use except making the heavy duty gear shifters o o al overhead costs allocated to the gear shifters are in fact common to all items uced in the factory and would continue unchanged even if the shifters were purchased prod from the outside Space now being used to produce shifters would be idle o Total Relevant Make Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Outside purchase price Total cost Should Mountain Goat Cycles Make or Buy shifters