Problem 3 (15 points) Maine Engine Corporation is considering manufacturing a new engine designated as model LX4. The engine will be a different size from any produced by Maine, and the company expects to sell 20,000 units a year. At the present time, the company has the capacity to produce the projected quantity of all of the parts required for 20,000 units of LX4 except for the pistons. Each model LX4 engine requires 4 pistons, so 80,000 pistons will be required annually. Pistons are manufactured in the company's Bangor plant, which is presently operating at full capacity. None of the company's other plants has the equipment or the expertise necessary to manufacture pistons. In order to manufacture the number of pistons required, the company can expand facilities at the Bangor plant by renting additional machinery at an annual cost of $30,000, and hiring an additional supervisor at an annual cost of $40,000. Alternatively, the company can purchase the required number of pistons of equal quality from Augusta Machine Works, an outside supplier, at a price of $4.40 each. The projected cost of manufacturing 80,000 pistons at the Bangor plant is as follows. MAINE ENGINE CORPORATION COST DATA FOR PRODUCING PISTONS AT BANGOR PLANT Direct Materials Direct Labor Applied Manufacturing Overhead S 160,000 80,000 240,000 The Bangor plant uses a predetermined manufacturing overhead rate determined on the basis of full absorption costing. Budgeted manufacturing overhead used as the basis for determining the rate was composed of 80% fixed cost and 20% variable cost. REQUIRED: Determine whether Maine Engine Corporation should manufacture the pistons in its Bangor plant or purchase them from Augusta Machine Works. Provide supporting computations for your