West Nevada Mining Company currently produces a component that is used in making some of its products. The company has calculated the following costs for making the component:

Unit-level costs Materials $ 20 Labor $28 Overhead $ 2 Allocated facility-level costs $10 Total cost $ 60

West Nevada is considering outsourcing the component. A supplier has offered to sell the component to West Nevada for $55 each. Eastern needs 10,000 units each year. If West Nevada does outsource the component, it can use the facilities to make another product that would yield a contribution margin of $60,000 per year.

1) Should West Nevada outsource the component? Support your answer with appropriate computations. 2) What qualitative factors should be considered in this decision?