Take me to the text Marty Monitors Ltd., a manufacturer of computer monitors, currently produces a 19-inch LCD monitor. The company's accounting department has reported the following annual costs of producing the LCD monitor internally: Marty Monitors Annual Production Costs for 19-inch LCD Monitor Per Unit 9,000 Units Direct Materials $29.00 Direct Labor $12.00 Variable Overhead $11.00 $9.00 Production Supervisor's Salary Depreciation of LCD manufacturing equipment Allocated Fixed Overhead $261,000 $ 108,000 $99,000 $81,000 $45,000 $135,000 $729,000 $5.00 $15.00 Total Cost $81.00 An external supplier has offered to provide Marty Monitors 9,000 units of the same LCD monitor per year at a price of $46 each. Also consider the following information: The LCD manufacturing equipment has no salvage value and has no other use aside from producing the 19-inch LCD monitors. It cannot be sold. The fixed overhead costs allocated to the LCD monitors are common to all items produced in the factory. The production supervisor will take over duties in another department if the monitors are purchased from the external supplier. If this is the case, his annual salary will drop to $72,900. Should the company continue manufacturing the monitors internally or begin purchasing them from the external supplier? Jenson Monitors Make or Buy Analysis Production Cost Per Unit Per Unit Differential Cost Total Differential Cost (9,000 Units) Make Direct Materials Buy Make Buy $29.00 $ 29 $ 0 $ 261000 $ 0 Direct Labor $12.00 $12 $ 0 108000 S 0 Variable Overhead $11.00 $ 11 $0.9 X $ 81000 > Depreciation of Equipment (sunk) $5.00 $ 0 $ 0 $ 0 $ 0 Allocated Fixed Overhead (common) $15.00 $ 0 $ 0 $ 0 Is o Outside Purchase Price $ 0 46 $0 Total Relevant Cost $81.00 $ 61 > $ 0 $ 549000 The company should: Buy >