Problem V: Make or Buy Decision (13 points) Troy, Inc. produces several models of watches. An outside supplier has offered to produce their commercial model watch for Troy f or $420 each. Troy needs 1,200 watches annually to meet their demand. Troy has provided the following unit costs for its commercial model watch: Direct Materials Direct labor Variable overhead Fixed overhead (40% avoidable) $100 120 80 150 Required: a. What should management do, should they make or buy the commercial model watches? Why? Prepare an incremental analysis report for Troy, Inc. to support your decision. Your analysis should have columns for (1) Make Part, (2) Buy Part, and (3) Net Income Increase (Decrease). Be sure to answer both questions asked and show calculations. b. Assume that through buying the commercial model watches from the outside supplier, Troy, Inc. can use the released productive capacity to generate additional income of $80,000. What should management do now? Why? Show computations and impact on net income. C. What non financial factors should management consider in making its decision? List at least four items