Q.2 Toronto Auto Co [TACo], has a parts division that needs 1,000 units of component CX12 per period in making car parts. It can buy the component for $1,250 each or make them under the following circumstances: Per Unit Direct materials $ 500 Direct manufacturing labour 250 Variable manufacturing overhead 200 Fixed manufacturing overhead 350 Total $1,300 If TACo buys the components, it can save 55% of fixed manufacturing overhead. Show calculations to prove whether TACo should make or buy the component. Alternatively, if TACo were to manufacture the part in-house, it can use extra capacity to supply another company that uses the same component. What cost information should be used for pricing the extra units? Required: List additional non-financial factors the company should use in deciding whe- ther to make or buy the component. What are the potential dangers of outsourcing ?