Question 15 (15 Marks) Tim Pty Ltd is considering whether to make or buy a component used in the production of their bicycle. The annual cost of producing the 10,000 components used by the company is as follows: Direct variable manufacturing costs $30,000 Direct fixed manufacturing costs $10,000 Allocated overhead $5,000 If Ofon were to discontinue production of the component, direct fixed manufacturing costs would be reduced by 70 per cent. Required: a. A supplier has agreed to supply Tim the components at a cost of $3.80. Should Tim buy or make the component? Show your calculations? (3) b. List and explain THREE potential pitfall that decision makers make when paying too much attention to sunk costs? (6) c. List and explain THREE potential problems with buying from an outside supplier rather than manufacturing in-house? (6) A