Problem 7-4 Make-or-Buy (16 points) For most construction projects, Bradley Heating and Cooling buys sheet metal and forms the metal into heating/cooling ducts as needed. The company estimates the costs of making and installing ductwork for Kerry Park shopping mall to be as follows: Materials $ 35,000 Labor to form ductwork 4,000 Labor to install ductwork 10,000 Misc. variable costs 1,500 Fixed costs allocated based on labor hours 3,000 Total costs $ 53,500 The fixed costs relate to the company's building equipment, and office staff. Expected billings and other costs pertaining to Kerry Park are: Projected billing of Kerry Park for services $ 68,000 Bradley is currently behind schedule on other projects which incurs costs as follows. The penalty is a variable cost. Late penalty $ 6,000 Walt Bradley, the owner of Bradley Heating and Cooling, is considering ordering prefabricated ductwork for the Kerry Park job, which includes the cost of sheet metal. The following cost is expected: Prefabricated ductwork cost $ 42,000 If Walt buys the prefabricated ductwork, he'll be able to reassign labor ductwork workers to another project and avoid late fees. If Walt buys the pre-fabricated ductwork, workers will still install the ductwork and incurr miscellaneous variable costs for the Kerry Park Job. Required Complete the schedule to determine if Bradley should make the ductwork or buy it prefabricated? Enter a 0 for any cells in G or H without a number. Buy Make the Difference (G- Prefabricated product H) Materials Labor to form ductwork Labor to install ductwork Miscellaneous variable costs Fixed costs allocated based on labor hou Penalty Total cost Explain if Bradley should make the ductwork or buy it prefabricated. Does buying the fabriated ductwork save costs or increase costs