MANAGERIAL ACCOUNTING QUIZ 6 Score Name Section Problem (10 points). Piccolo Company manufactures parts for automobiles. The company sometimes will enter into agreements with other companies to produce some of its parts. Currently the company is considering the possibility ofhaving Pipe Organ Corporation produce a part that is used in assembling automatic transmissions Currently, it costs Piccolo Company the following to produce 30,000 units of this part. PICCOLO COMPANY UNIT PRODUCTION COSTS FOR ONE UNIT OF PART FOR TRANSMISSIONS Per Unit Costs: Direct Materials S 10.00 Direct Labor 4.50 Variable Manufacturing Overhead 4.00 Fixed Manufacturing Overhead (based on 30,000 units produced) 5.00 Pipe Organ Corporation has quoted a price of $23.00 per unit to produce the part for Piccolo Company. If Piccolo Company buys the part from Pipe Organ, it will save $70,000 of fixed manufacturing overhead and will be able to rent the space that would not be used for production to another company for $65,000. REQUIRED: Should Piccolo Company buy the part from Pipe Organ Corporation or should it continue to make the part? Explain your answer, showing al appropriate computations