Tanner Appliance Company manufactures 12,600 units of part M4annually. The part is used in the production of one of itsprincipal products. The following unit cost information isavailable on part M4:

Directmaterials $11

Directlabor 9

Unit relatedsupport 4

Batch relatedsupport 5

Product sustaining support 2

Facility sustaining support 2

Allocated corporate support 5

Totalcosts $38

A potential supplier has offered to manufacture this part forTanner Appliance for $30 per unit. Ifr Tanner Applianceoutsources the production of part M4, 50% of batch related and 80%of product sustaining resources can be eliminated. Furthermore, the production facility now being used to produce thispart can be used for a fast-growing new product line that wouldotherwise require the use of a neighboring facility at a rentalcost of 20,000 per year.

a. Should Tanner Appliance purchase part M4 from theoutside supplier?

b. What costs are relevant for this decision?

c. What additional factors should Tanner consider?