Please explain how to calculate the Materials, Labor and variable overhead alternate cost.

Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 2,000 units).

Direct materials	$	50
Direct labor		106
Variable overhead		32
Fixed overhead		94
Total	$	282

Trailblazers has offered to sell the assembly to Mobility for $220 each. The total order would amount to 2,000 rear wheel assemblies per year, which Mobilitys management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazerss offer would eliminate annual fixed overhead of $80,000.

Required:

a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.)

Status Quo	Alternative	Difference
Trailblazers offer		$440,000	$440,000	higher
Materials	100,000		100,000	lower
Labor	212,000		212,000	lower
Variable overhead	64,000		64,000	lower
Fixed overhead applied	188,000	108,000	80,000	lower
Total costs	$564,000	$548,000	$16,000	lower