The Partyka Company produces gas grills. This year's expected production is 15,000 units. Currently, Partyka makes the side burners for its grills. Each grill includes two side burners. Partyka's management accountant reports the following costs for making the 30,000 burners:

Cost per Unit

Cost for 30,000 Units

Direct materials

$4.50

$135,000

Direct manufacturing labor

2.40

72,000

Variable manufacturing overhead

1.75

52,500

Inspection, setup, materials handling

3,750

Machine rent

9,000

Allocated fixed costs of plant administration, taxes, and insurance

25,000

Total costs

$297,250

PartykaPartyka

has received an offer from an outside vendor to supply any number of burners

PartykaPartyka

requires at

$ 10.25$10.25

per burner. The following additional information is available:

a.	Inspection, setup, and materials-handling costs vary with the number of batches in which the burners are produced. Partyka produces burners in batch sizes of 1,000 units. Partyka will produce the 30,000 units in 30 batches.
b.	Partyka rents the machine used to make the burners. If Partyka buys all of its burners from the outside vendor, it does not need to pay rent on this machine.

1.	Assume that if Partyka purchases the burners from the outside vendor, the facility where the burners are currently made will remain idle. On the basis of financial considerations alone, should Partyka accept the outside vendor's offer at the anticipated volume of 30,000 burners? Show your calculations.
2.	For this question, assume that if the burners are purchased outside, the facilities where the burners are currently made will be used to upgrade the grills by adding a rotisserie attachment. (Note: Each grill contains two burners and one rotisserie attachment.) As a consequence, the selling price of grills will be raised by $25. The variable cost per unit of the upgrade would be $19, and additional tooling costs of $110,000 would be incurred. On the basis of financial considerations alone, should Partyka make or buy the burners, assuming that 15,000 grills are produced(and sold)? Show your calculations.
3.	The sales manager at Partyka is concerned that the estimate of 15,000 grills may be high and believes that only 12,000 grills will be sold. Production will be cut back, freeing up work space. This space can be use to add the rotisserie attachments whether Partyka buys the burners or makes them in-house. At this lower output, Partyka will produce the burners in 24 batches of 1,000 units each. On the basis of financial considerations alone, should Partyka purchase the burners from the outside vendor? Show your calculations.