Problem #2- Make vs. Buy Belanger Company owns a machine that produces a component for the products the company makes and sells. The company uses 1,800 units of this component in production each year. The costs of making one unit of this component are Direct material $ 7 Variable manufacturing overhead Direct labor Fixed manufacturing overhead 5 6 4 The fixed overhead costs are unavoidable, and the unit cost is based on the present annual usage of 1,800 units of the component. An outside supplier has offered to sell Belanger this component for $18 per unit and can supply all the units it needs. A. If Belanger buys the component from the outside supplier instead of making it, how much will net income change? Should Belanger make or buy the component? Use the incremental approach to justify your answer. Problem #3- Special Pricing 5 4 Murray Company makes and sells 12,000 pairs of running shoes each year. The cost of making one pair of these shoes is Direct material $11 Variable manufacturing overhead Direct labor Fixed manufacturing overhead The fixed overhead costs are unavoidable. Murray allocates fixed overhead costs based on its annual capacity of 15,000 pairs it is able to make. An overseas company recently offered to buy 3,000 pairs of shoes at $21 per pair. Regular customers buy shoes from Murray at $30 per pair. How much is incremental income if Murray accepts the special order? Should Murray accept?1 Use the incremental approach to justify your answer. 7