Bancroft currently manufactures a subcomponent that is used in its main product. A supplier has offered to supply all the subcomponents needed at a price of $121. Bancroft currently produces 20,700 subcomponents at the following manufacturing costs:

Per unit

Direct materials ...............................................$41

Direct labor ............................................. 33

Variable manufacturing overhead ..................... 36

Fixed manufacturing overhead ......................... 22

Unite cost ...............................................132

a. If Bancroft has no alternative uses for the manufacturing capacity, what would be the profit impact of buying the subcomponents from the supplier?

b. If Bancroft has no alternative uses for the manufacturing capacity, what would be the maximum price per unit they would be willing to pay the supplier?

c. Now assume Bancroft would avoid $321,000 in equipment leases and salaries if the subcomponent were purchased from the supplier. Now what would be the profit impact of buying from the supplier?