Question:

QQQ Inc. (the company) manufactures swimming pools.

One of their divisions manufactures liners which are used in several of their swimming pools.

They produce 100,000 liners annually.

The cost per unit for the liners is as follows:

Description	Per Unit Cost
Direct materials	$8.10
Direct labour	$4.50
Variable overhead	$2.30
Fixed overhead	$3.90
Total cost	$18.80

Of the total fixed overhead assigned to the liners, $45,000 is directly traceable to the production of the liners.

The remaining fixed overhead costs are common fixed overhead and therefore unavoidable.

An outside supplier has offered to sell the liners to the company for $18.00 per unit.

Required:

Analyze the above information and determine if the company should make or buy the liners.

If there was no other alternative use for the facilities that is currently used to produce the liners, should the company make or buy the liners?

Enter one of the following in the space provided: M for make, B for buy, or NA for indifferent.

What is the most that the company would be willing to pay an outside supplier for one liner?

If the company buys all of their liners from the supplier, would their operating income increase, decrease, or stay the same?

Enter one of the following in the space provided: IN for increase, DE for decrease, and NA for stay the same.

If the company buys all of their liners from the supplier, by how much would their operating income change?

Enter your answer as a positive number.

If the company could rent out the space that is currently used to produce the liners for $90,000 per year, should the company make or buy the liners?

Enter one of the following in the space provided: M for make, B for buy, or NA for indifferent.

If the company buys the liners from the supplier and then rents out the space that is currently used to produce the liners for $90,000 per year, by how much would their operating income change?

Enter your answer as a positive number.