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ve is ienct hire poytuk Question 4 (20 points) Mamweli Co manufactires mwitches that it wits in sevnal of ta produets Miragemert is. considering whether

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ve is ienct hire poytuk Question 4 (20 points) Mamweli Co manufactires mwitches that it wits in sevnal of ta produets Miragemert is. considering whether to continue manutocturing the taitches er fo buy tham from an eutuide. source. The folowing information in irealucise The compary needs 100000 twithet per yex. Satotet can be purchased brem an outade supplier at a cost of 35 per unit. The cost of manifacturing swithes it 15 per unt cemoutes as follows. Direct materaly Direct laber 5160.600 110.000 Cest per unit (\$580.000 100.000 untes) $5.46 Discontinuing the manutacture of the nwtches ait cimote al the diect materials and direct labor costs but wat eliminane only 89 peretrt et the warable everteat costs If the swithes are purchased tram an outide source, certsin machinery used in the production. process would no longer have to be leased, Aceerdingly, 520,000 of fixtd overhead costs could be avoided. No ocher reduction wil renul trom diccertinuing froduction of the saflches. Instructionst: a. Prepare a schedule to determine ke incremental eot or benech of buying swichibs from the outside suppler. Based en this schedve. would you recemmond that the company manutacture the switches er byy them from the oulside sourpe? Total cost of manylacturing the sartshes 5 (4 peints) Tolat eest of buying the emitches 5 . (4 points) b. Assume that if switches are purchased thom the oukside sourco, the factory space: previously used to produoe switches can be rented to another butiress for $20,000 per. month. Would this new assumption change your recommendation as to whether to make or buy switches? in suppart of your conclusion. prepare a new schedule showing the incremental cost or benefit of buying swtches from the .outside source and renting the factory space. Total cost of manufacturing the iwtethes 5 . (4) poinhs) Tetal cost of buying the switches $1 (4 pgiris) Indicate the opportunity cost 5 (4 points)

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