Tish Corporation makes 5,000 units of a part call Greentron for use in one of its products. Data concerning the unit production costs of the Greentron follow: Direct materials $10 Direct labor $7 Variable manufacturing overhead $1 Fixed manufacturing overhead $12 Unit product cost $30 [note] The total fixed manufacturing overhead is 125,000= 60,000. An outside supplier has offered to provide the annual requirement of 5,000 of the parts for only $25 each. The company estimates that 40% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision.

1. If Tish Corp. Has no alternative use for the facilities presently devoted to the production of the product, should Tish accept the offer by the outside supplier? Fully support your answer with appropriate calculations.

2. If the space used to make Greentron may be freed up and rented out for $20,000, should Tish accept the offer by the outside supplier? Fully support your answer with appropriate calculations.