The overhead amount of $56.00 per unit includes both variable and fixed items as follows: Supervision was directly traceable to the manufacturing activity and primarily involved supervising the hourly labour and overseeing production. The new equipment would be more efficient and would reduce direct labour costs and variable overhead costs by 25%. Supervision cost ($430,000 per year) and direct materials cost per unit would not be affected by the new equipment. The company has no other use for the space now being used to produce the engines. The company's total general overhead would not be affected by this decision. Required: 1. Assume that 42,200 engines are needed each year. Should GEC purchase new equipment and continue manufacturing the engines, or should it buy the engines from the outside supplier? New equipment Outside supplier 2. At what level of activity will the company be indifferent between the two options? (Do not round intermediate calculations and round your final answer to nearest whole number.) 3. This part of the question is not part of your Connect assignment