Problem 2 34 Points Rainy Inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 16,000 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows: Direct materials .................................... Direct labor .... Variable manufacturing overhead........ Fixed manufacturing overhead............. Unit product cost .................................. $8.10 6.40 1.70 4.40 $20.60 Of the $70,400 fixed manufacturing overhead, $20,000 represents depreciation of equipment purchased to help make the component part. This equipment has no resale value. The remainder of the fixed overhead cost represents general fixed overhead allocated to this component. If the component were bought from the outside supplier, 20% of this general allocated fixed overhead could be eliminated. What decision would you recommend to management? Support your recommendation with appropriate incremental analysis