.5 E17-22. Outsourcing (Make-or-Buy) Decision the predicted cost per unit of an auto air purifier follows. $ 9.00 Direct materials Direct labor.. Factory overhead Total 1.40 10.00 $20.40 These cost predictions include $80,000 in fixed factory overhead averaged over 10,000 units. The completed air purifier units include a battery-operated electric motor, which Mountain Are assembles with parts purchased from an outside vendor for $2.00 per motor. Mini Motor Company has offered to supply an assembled battery-operated motor at a cost of $5.50 per unit, with a minimum a nual order of 5,000 units. If Mountain Air accepts this offer, it will be able to reduce the variable laber and variable overhead costs of the auto air purifier by 50 percent. Required a. Determine whether Mountain Air should continue to make the electric motor or outsource it from Mini Motor Company. (Hint: analyze the relevant costs of making the "motors," not the entire air purifier.) Mountain Air Limited manufactures a line of room air purifiers. Management is currently evaluating the possible production of an air purifier for automobiles. Based on an annual volume of 10.000 win 17-28 Module 17 Relevant Costs and Benefits for Decision Making h. If it could otherwise rent the motor-assembly space for $25,000 per year, should it make or outsource this component? c. What additional factors should it consider in deciding whether to make or outsource the electric motors? LO1, 2,5