The Cozy Shoe Company currently manufacturers slippers. The company's variable manufacturing costs per pair of slippers are: Direct Material Direct Labour $8.00 4.00 Variable Overhead 1.75 The total fixed overhead for the slipper production process is $500,000. Sixty percent (60%) of this amount is an allocation of company-wide fixed costs that will be incurred whether the slippers are made or purchased. The other 40% of the fixed costs represents rent and supervisory salaries that can be eliminated if we stop making the slippers. The company anticipates demand of 20,000 units per year for the next several years. An outside company has offered to sell slippers to the Cozy Shoe Company for $25 per unit. REQUIRED: 1. Should the company continue making slippers or should it buy it from the outside company? Quantify your answer on a per unit and annual basis given current demand. 2. Assume now that we could use the space given up if we buy the slippers to produce a different product. What is the minimum amount of annual income, if any, the new product would have to generate before your answer to Requirement #1 would change?