Question $17(10$ points$)$

Zoom Golf Carts $($ZGC$)$ currently produces its own electric motors. Electco has offered to sell the electric motors to ZGC at a price of $$500$ each.

ZGC$\text{'}$s current production information for the motors follows:

Unit$-$level material and labor

Facility$-$level depreciation

of manufacturing equip.

Product$-$level supervisor's salary

Annual facility$-$level utilities

$$225$

$$12,\frac{000}{?}$ year

$$27,\frac{000}{?}$ year

$$2,100$

ZGC is currently operating profitably producing $1975$ engines a year. ZGC maintains worker loyalty by offering employees lifetime employment. Calculate the Total Variable Cost, Total Fixed Cost, Total Cost to Produce $1975$ Engines. Write a recommendation to the owner of Zoom Golf Carts based on your calculations as to whether they should continue producing the motors in$-$house or purchase engines from Electco.