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ROWENA Corporation manufactures laser printers. ROWENA currently manufactures the 32,000 imaging drums that it uses in its printers. The annual costs to manufacture these

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ROWENA Corporation manufactures laser printers. ROWENA currently manufactures the 32,000 imaging drums that it uses in its printers. The annual costs to manufacture these 32,000 drums are as follows: Variable Mfg cost Fixed Mfg cost Total cost P 736,000 2,080,000 P 2,816,000 Hardware Solutions, Inc. has offered to provide Rowena with all of its imaging drum needs for 72 per drum. If Rowena accepts this offer, 70% of the fixed manufacturing cost above could be totally eliminated. Also, Rowena will be able to use the freed-up space to generate $240,000 of income each year in the production of alternative products. The cost to make is O P2,432,000 O $2,192,000 $2,304,000 976,000

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