The Northwest Division of the Paibec Corporation manufactures subassemblies used in Paibecs final products. Lynn Hardt of Northwests profit-planning department has been assigned the task of determining whether Northwest should continue to manufacture a subassembly component, MTR-2000, or purchase it from Marley Company, an outside supplier. Marley has submitted a bid to manufacture and supply the 30,000 units of MTR-2000 that Paibec will need for 2022 at a per-unit price of $21.50. Marley has assured Paibec that the units will be delivered according to Paibecs production specifications and needs. The contract price of $21.50 is applicable only in 2022 but Marley is interested in entering into a long-term arrangement beyond 2022. Lynn has submitted the following information regarding Midwests cost to manufacture 25,000 units of MTR-2000 in 2021: Direct materials $168,750 Direct labor $100,000 Factory space rental $150,000 Equipment leasing costs $45,000 Other manufacturing costs $250,000 Total manufacturing costs $713,750 Lynn has collected the following information related to manufacturing MTR-2000: Equipment leasing costs represent special equipment used to manufacture MTR-2000. Northwest can terminate this lease by paying the equivalent of one months lease payment for each of the two years left on its lease agreement. Forty percent of the other manufacturing overhead is considered variable. Variable overhead changes with the number of units produced, and this rate per unit is not expected to change in 2022. The fixed manufacturing overhead costs are not expected to change whether Northwest manufactures or purchases MTR-2000. Northwest can use equipment other than the leased equipment in its other manufacturing operations. Direct materials cost used in the production of MTR-2000 is expected to increase 8 percent in 2022. Northwest direct labor contract calls for a 4 percent wage increase in 2022. The facilities used to manufacture MTR-2000 are rented under a month-to-month rental agreement. Northwest would have no need for this space if it does not manufacture MTR-2000. Northwest can withdraw from the rental agreement without any penalty. John Porter, Northwest divisional manager, stopped by Lynns office to voice his opinion regarding the outsourcing of MTR-2000. He commented, I am really concerned about outsourcing MTR-2000. I have a son-in-law and a nephew, not to mention a member of our bowling team, who work on MTR-2000. They could lose their jobs if we buy that component from Marley. I really would appreciate anything you can do to make sure the cost analysis shows that we should continue making MTR-2000. Corporate is not aware of materials cost increases and maybe you can leave out some of those costs. I just think we should continue making MTR-2000. 1. Prepare a relevant cost analysis that shows whether the Northwest Division should make MTR-2000 or purchase it from Marley Company for 2022. (a) what is the relevant cost per unit to make and the relevant cost per unit to buy externally? (Round both answers to two (2) decimal places.) (b) What is the total difference in relevant costs between the two alternatives, assuming a volume of 30,000 units? (Round answer to nearest whole dollar. (C) What comparable savings would you expect in later years?