The management of York Manufacturing Company has asked for your assistance in deciding whether to continue manufacturing a part or to buy it from an outside supplier. The part, called Vera, is a component of York's finished product. An analysis of the accounting records and the production data revealed the following information for the year ending December 31, 2008: 1) The machinery department produced 35,000 units of Vera. 2) Three people in the machinery department work full-time (2,000 hours per year each) producing Vera. Each person is paid $12 per hour. 3) The cost of materials per Vera unit is $2.20. 4) Manufacturing costs directly applicable to the production of Vera are as follows: indirect labour, $6,000; utilities, $1,500; small tools, $1,800; property taxes and insurance, $1,000. All of the costs will be eliminated if Vera is purchased. 5) The lowest price for a Vera from an outside supplier is $4 per unit. Freight charges would be $0.50 per unit, and a part-time receiving clerk at $8,500 per year would be required. 6) If Vera is purchased, the excess space that becomes available will be used to store York's finished product. Currently, York rents storage space at approximately $0.80 per unit stored per year. Approximately 5,000 units per year are stored in the rented space. Instructions: (a) Prepare an incremental analysis for the make-or-buy decision. Should York Manufacturing Company make or buy the part? Why? (b) Prepare an incremental analysis, assuming the released facilities (freed-up space) can be used to produce $12,000 of net income in addition to the savings on the rental of storage space. What decision should now be made?