Problem #2 - Make or Buy Collins Inc. manufactures sprinkler systems. Each sprinkler system requires a timer that determines when the system tums on and off. Collins is currently producing and using 10,000 timers. They have provided us with the following cost information: 10,000 Units Per Unit Per Year Direct materials 5 5.00 $ 50,000 Direct labor 8.50 85,000 Variable manufacturing overhead 1.75 17,500 Fixed manufacturing overhead, traceable 8.00 $ 80,000 Fixed manufacturing overhead, allocated 10.00 $ 100,000 Total cost $ 31.25 $ 312,500 30% of the fixed traceable overhead is the salary of one supervisor. The other 70% is for depreciation on the equipment that makes the timers. This equipment has no alternative use and cannot be sold. A vendor has offered to sell them the timers for $22 each. Required: 1. Assuming they have no alternative use for the facilities, what is the relevant cost of making versus the relevant cost of buying? What should they do? 2. Assuming they can rent the facilities to someone else for $75,000, what is the relevant cost of making versus the relevant cost of buying? What should they do