Tanner Appliance Company manufactures 12,000 units of part M4 annually. The part is used in the production of one of its principal products. The following unit cost information is available on part M4:

A potential supplier has offered to manufacture this part for Tanner appliance for $ 30 per unit. If Tanner appliance outsources the production of part M4, 50% of batch related and 80% of product sustaining activity resources can be eliminated. Furthermore, the production facility now being used to produce this part can be used for a fast-growing new product line that otherwise requires the use of a neighboring facility at a rental cost of $ 20,000 per year.
a) Should tanner appliance purchase part M4 from the outside supplier?
b) What costs are relevant for this decision?
c) What additional factors should Tanner considered?

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Direct materials Direct labor Unit related support Batch related support Product sustaining support Facility sustaining support Allocated corporate support Total cost S 11 S38