Levoy, Corp., estimates it will produce $25,000$ units of an electronic sensor part that goes into one of

its final products, called a Fluctotron. It currently produces this sensor internally but is considering

outsourcing this activity. Current internal capacity permits the production of a maximum of $40,000$

sensors$.$ The production manager has prepared the following information concerning the internal

manufacture of $40,000$ sensors:

Per Sensor

Direct materials $$15\mathrm{.}00$

Direct labor $8\mathrm{.}00$

Variable overhead $10\mathrm{.}00$

Fixed overhead $11\mathrm{.}00$

Total cost $$44\mathrm{.}00$

The fixed overhead of $$11$ per unit includes a $$2$ per unit allocation for salary paid to a supervisor to

oversee production of sensors$.$ The fixed costs would not be reduced by outsourcing, except the super$-$visor would be fired $($the company would terminate his contract$).$ Assume that if Levoy outsources, its

purchase price from the outsourcer is $$38$ per unit.

$1.$ Should Levoy outsource? Why or why not?

$2.$ Assume that if Levoy outsourced, it would create sufficient excess capacity such that it would

retain the supervisor and have him oversee production of a new optical reading product, called a

Scanmeister. If each Scanmeister generates a contribution margin of $$15$ and the company pro$-$duces $10,000$ Scanmeisters, what is the maximum price Levoy would accept for outsourcing the

sensors$?$