Question 7 YUI company uses component NO.789 in one of its products. The financial branch reports the following costs of producing the 6,800 units of the part that are needed each year. Currently, an outside supplier offered to manufacture the parts and sell them to the company for $31 each. If this proposal is accepted, the supervisor's salary and all variable costs, including direct labor, can be avoided. The equipment used to make the component was purchased ten years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $3,000 of these allocated general overhead costs would be avoided. The space used to produce component NO.789 could be used to make company's other products, generating an additional segment margin of $14,500 per year for that product. Required: 1. What is the financial advantage or disadvantage of accepting the outside supplier's offer? Show your calculations with a report. 2. Should the company make or buy component NO.789? Show your analysis