Question $2-10$ marks

Piels Corporation produces a part that is used in the manufacture of one of its products. The costs

associated with the production of $10,000$ units of this part are as follows:

Of the fixed factory overhead costs, $$60,000$ is avoidable. There is also no other use for the facilities.

Conners Company has offered to sell $10,000$ units of the same part to Piels Corporation for $$36$ per

unit.

Required:

$($i$)$ Determine the highest price that Piels should be willing to pay for $10,000$ units of the part?

$($ii$)$ Prepare an analysis to assist Piels in deciding whether to continue to produce the part in$-$house or to

purchase the part from Conners.

$($iii$)$Using your analysis from part $($ii$),$ advise Piels on the make$-$buy decision.

$($iv$)$ Identify three qualitative factors that Piels should consider when making this outsourcing decision.