Exercise $12-3($Static$)$ Make or Buy a Component $[$LO$2]$

Current$-$Control Inc. manufactures a variety of electrical switches. The company is currently manufacturing all of its own component

parts. An outside supplier has offered to sell a switch to Current$-$Control for $$32$ per unit. To evaluate this offer, Current$-$Control has

gathered the following information relating to its own cost of producing the switch internally:

$*25\%$ supervisory salaries; $75\%$ depreciation of special equipment $($no resale value$).$

Required:

$1-$a$.$ Assuming that the company has no alternative use for the facilities now being used to produce the switch, compute the total cost

of making and buying the parts.

$1-$b$.$ Should the outside supplier's offer be accepted?

Accept

Reject

$2-$a$.$ Suppose that if the switches were purchased, Current$-$Control could use the freed capacity to launch a new product. The segment

margin of the new product would be $$78,000$ per year. Compute the total cost of making and buying the parts.

$2-$b$.$ Should Current$-$Control accept the offer to buy the switches from the outside supplier for $$32$ each?

Accept

Reject

I am unsure if these answers are correct. I am hoping it can be double checked and if something is incorrect, please correct it and tell me how you got the corrected answer $($if applicable$).$ Thank you.