TOHOWS: Direct materials Total Cost of 20000 Units (5) 240,000 Cost Per Unit (5) Direct labour 12 200,000 10 Variable manufacturing overhead costs (power and utilities) Fixed manufacturing overhead costs Share of non-manufacturing overheads 20,000 1 160,000 8 Total costs 5 100,000 720,000 36 The above costs are expected to remain unchanged in the foreseeable. The supplier has offered to supply 20000 components per annum at a price of $32 per unit. If the company outsources component A the direct labour force currently employed in producing the components will not be needed anymore and there will be no labour cost. Direct materials and variable overheads are avoidable if component A is outsourced. Fixed manufacturing overhead costs would be reduced by $20 000 per annum but non-manufacturing costs would remain unchanged. Assume that the capacity that is required for component A has no alternative use. Should the company make or buy the component? (20 Points) Total Cost of Making 20 000 Units (5) Total Cost of Buying 20 000 Units ($) Total costs