Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversity in order to stablize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However, Silven's resident has decided to in one of the new products for this coming winter.If the product troduce only is a success, further expansion in future years will be initiated. The product selected (called Chap-Off) is a lip balm that will be sold in a lipstick-type tube. The pr boxes of 24 tubes for $ produce the product. H company's absorption costing system. product will be sold to wholesalers in 8 per box. Because of excess capacity, no additional fixed manufacturing overhead costs will be incurred to owever, a $135,000 charge for fixed manufacturing overhead will be absorbed by the product under the boxes of Chap-Off, the Accounting Department has developed the following Using the estimated sales and production of 135,000 manufacturing cost per box: Direct material Direct labor Manufacturing overhead Total cost $3.50 1.80 1.50 $6.80 osts above relate to making both the lip balm and the tube that contains it, As an alternative to making the tubes for Chap-off Silven has approached a supplier to discuss the possibility of buying the tubes. The purchase price of the supplier's empty tubes would be $1.50 per box of 24 tubes. If Silven Industries stops making the tubes and buys them from the outside su labor and variable manufacturing overhead costs per box of Chap-Off would be reduced by 10% and its drect materials costs would be reduced by 30%