Problem $3-15$ points

Sourcing Decision $($Make or Buy$)$

& $2.$ We are trying to decide if we want to make the seats for our bikes, or buy the seats from

an outside supplier for $$45$ each.

The cost to make the needed $10,000$ bikes seats are:

$*$One$-$third supervisor's salaries, two$-$third's deprecation of special equipment

$($no resale value$)$

Should we make or buy the bike seat? What is the effect on net income of making the seats over

buying the seats?