Consider the hardware company in Exercise 1-15. The company is contemplating outsourcing of its complex monitor M2. Assume that all other information remains as given in Exercise 1-15.
(a) What is the cost per unit of each product using activity-based costing assuming that M2 is not produced?
(b) A prospective supplier of monitor M2 has offered a unit price of $480. Should the company outsource the monitor M2 to this supplier? Discuss.
TABLE 1-7

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CPU Monitor Cl C2 M1 M2 Annual volume Unit costs 10,000 15,000 18,000 20,000 Direct labor () Direct material (S) Assembly ($) 80 60 40 140 100 60 120 80 60 200 120 100