The Hyatt Company is trying to decide whether it should continue to make its sub-assemblies or if it should purchase them from an outside supplier for $9.00 each. Currently, 40,000 units per year are manufactured internally, with the following costs: Direct Materials IS 3.00 Direct Labour IS 4.20 Variable Overhead IS 0.60 Fixed Overhead S 3.70 Total Manufacturing Cost per Unit S 11.50 * The fixed overhead cost consists of $0.80 for supervision**, $0.90 for taxes and $2.00 for rent. ** The supervisor position would be eliminated if the sub- assemblies were sourced outside. Required: 1. Prepare an analysis of the two alternatives and make a recommendation. 14 Marks 2. Assume that Hyatt could use the facilities to expand production for another product that would yield an additional contribution margin of $80,000 annually. What is the maximum price Hyatt should be willing to pay the outside supplier for the sub- assemblies? 6 Marks