The Adrenaline company manufactures ATVs. Adrenaline manufactures two types of ATVs: Regular and Hyper. The Hyper ATV uses a special Turbo engine, which increases the acceleration and power of the engine. Adrenaline produces the engines, but outsources the turbocharger from Turbo, Inc for $500 per unit. Currently, Adrenaline produces and sells 600 units of its standard model and 400 of its Turbo model every year. The Hyper model requires a special machine for installation, which is operating at capacity. Apart from the engine, the two models are the same and are purchased from a larger ATV manufacturer for $5,000 each.

The data for the two engines units is given below.

Regular Hyper Raw Materials $400 $1,050 (including turbocharger for $500) Labor 20 has @ $30 30 has@ $30 Variable Overhead $40 per DLH $30 per DLH Fixed Overhead $50 per DLH $40 per DLH Market Price $10,000 $15,000 Adrenaline is considering whether to rent a plant for $20,000 per year to produce the 400 units of the turbocharger instead of purchasing them. The budgeted costs per unit for 400 units (not including rent) are as follows: Thermo. System Raw Materials $150 Direct Labor 2 l); @ $30 Variable Overhead $80 per DLH Fixed Overhead $70 per DLH Lam 1.0.0.0.unil