Problem #1 Make or Buy Young Inc. has been manufacturing its own lamp shades for its table lamps. The company is currently operating at 100% capacity. The direct materials cost is $4 per unit, the direct labour cost is $6 per unit and variable manufacturing costs are 50% of direct labour. Total fixed manufacturing costs are $300,000 per year. Normal production is 50,000 lampshades per year. A supplier offers to make the lampshades at a price of $18.50 per unit. If Young Inc. accepts the offer all variable manufacturing cost would be avoidable and $50,000 of the total fixed manufacturing costs would not and would have to be absorbed by other products. a) Prepare an incremental analysis for the decision to make or buy the lampshades. b) Should Young make or buy the lampshades? c) Assume that if Young decides to buy the lampshades part of the factory space could be rented out for $40,000 per year. Should Young make or buy the lampshades? Show your calculations