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ProPrinters uses part 87A in the production of colour printers. Unit manufacturing costs of part 87A are as follows: Unit Cost Direct Materials Direct Labour

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ProPrinters uses part 87A in the production of colour printers. Unit manufacturing costs of part 87A are as follows: Unit Cost Direct Materials Direct Labour Variable manufacturing overhead Variable marketing overhead Fixed plant overhead $8.00 2.00 1.00 1.50 4.00 16.50 ProPrinters uses 100,000 units of 87A per year. Printers R Us has offered to sell ProPrinters 100,000 units of 87A per year for $12. Fixed overhead will continue whether the part is produced internally or externally. No additional costs of purchasing will be incurred beyond the purchase price Required: a. What are the alternatives for Pro Printers? (1 mark) b. Which alternative is more cost effective and by how much? (5 marks) c. Now assume that 30% of the fixed overhead can be avoided if the part is purchased externally. Which alternative is more cost effective and by how much? (2 marks) d. List two qualitative factors that ProPrinters' should consider before making a decision

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