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McCarthy Electronics, Co manufactures a computer chip that it uses in it's gaming system. The chip has the following manufacturing coster per unit: McCarthy Electronics, Co Direct Materials $19.00 Direct Labor $18.00 Variable manufacturing overhead $6.50 Fixed manufacturing overhead $9.50 Cost per computer chip $51.50 Another computer chip manufacturer has offered to sell McCarthy Electronics, Co $39.00 per unit. Should McCarthy Electronics, Co buy the chip from the outside supplier? The idle manufacturing facilities cannot be used for any other purpose, yet none of the fixed costs are avoidable. 1. Prepare an analysis to determine if they should continue to make the computer chip or outsource it. (Use zero if there is no value). Computer Chip Costs Make Outsource Difference (Make - Outsource) Variable Costs: Direct Materials Direct Labor Variable manufacturing overhead Purchase cost Total differential cost per loaf 2. What would you recommend? Submit All Parts