Make or Buy a Component 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, Inc., has gathered the following information relating to its own cost of producing the switch internally: 12,000 Units Per Unit per Year Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead, traceable $12 10 3 8* Fixed manufacturing overhead, common, but allocated 16 $144,000 120,000 36,000 96,000 192.000 Total cost "25% supervisory salaries, 75% depreciation of special equipment (no resale value) quired 1. Assuming that the company has no alternative use for the facilities novw being used to produce the switch, should the outside supplier's offer be accepted? Show all computations. Suppose that if the switches were purchased, Current-Control, Inc., could use the freed capacity to launch a new product. The segment margin of the new product would be $78,000 per year. Should Current-Control, Inc. accept the offer to buy the switches from the outside supplier for $32 each? Show computations. 2