Stuart Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Stuart produces a relatively small amount (14,000 units) of the cream and is considering the purchase of the product from an outside supplier for $5.70 each. If Stuart purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name. Stuarts accountant constructed the following profitability analysis:

Revenue (14,000 units x $14.00) $196,000 Unit-level materials costs (14,000 units x $1.70) Unit-level labor costs ( 14 , 000 units $0. 60 ) Unit-level overhead costs (14,000 x $0.40) Unit-level selling expenses (14,000 $0.20) (23, 800) (8,400) (5,600) (2,800 155,400 (57,000) (13,900) (46,000) Contribution margin Skin cream production supervisor's salary Allocated portion of facility-level costs Product-level advertising cost Contribution to companywide income $38,500 Required a. Identify the cost items relevant to the make-or-outsource decision b. What is the avoidable cost per unit if the outsourcing decision is taken? Should Stuart continue to make the product or buy it from the supplier? c. Suppose that Stuart is able to increase sales by 17,000 units (sales will increase to 31,000 units). Calculate the total avoidable costs At this level of production, should Stuart make or buy the cream? Required ARequired B Required C Identify the cost items relevant to the make-or-outsource decision Total avoidable costs Required ARequired B Required C What is the avoidable cost per unit if the outsourcing decision is taken? Should Stuart continue to make the product or buy it from the supplier? (Round your answer to 2 decimal places.) Total avoidable costs per unit Should Stuart continue to make the product or buy it from the supplier? uy Required A Required B Required C Suppose that Stuart is able to increase sales by 17,000 units (sales will increase to 31,000 units). Calculate the total avoidable costs. At this level of production, should Stuart make or buy the cream? Total avoidable costs At this level of production, should Stuart make or buy the cream? Make