Problem 9.2 Make or Buy The Acme Manufacturing Company manufactures a product which requires component X. However, a supplier has offered to sell component X at $4.00 per unit. Acme's cost in manufacturing 1,000 units this past year was reported by the management accountant as follows: Material $ 2,000 Insurance $200 Direct labor $ 1,000 Power and lights $500 Indirect labor $ 500 Depreciation (bldg.) $400 Gen. & admin. sal. $ 500 Note: all costs are presented on a per year basis. If the component is purchased, then material, direct labor, and indirect labor costs would be eliminated. Insurance and power and lights would be reduced by $50 and $100 respectively. General and administrative salaries would not change. The building in which component X is now manufactured can be leased for $1,000. Required: 1. What is the incremental cost if component X is purchased? $ 2. What is the total relevant cost of the make decision? $ 3. What is the total relevant cost of the purchase decision? $ 4. What is the amount of the opportunity cost? $ 5. What is the total amount of escapable cost? $ 6. What is the amount of opportunity cost in this analysis? $