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. 4 [15 points]. Our company makes equipment used in biomedical research. One of our many products is a test bench model TB-17XR. An important component of this test bench is a specialized pump. We currently make this specialized pump ourselves. We are considering buying it instead from an outside supplier for $257 per unit. We expect to need 3,300 of the pumps this year. The following data about the pumps we make are provided to help us make the insource vs outsource decision: In our normal absorption costing system, each of the 3,300 pumps we plan to make has the following costs: Direct materials cost per pump is $49; Direct labor cost per pump is $73; Variable manufacturing overhead cost per pump is $17; Fixed manufacturing overhead cost per pump is $39. o O O O Of the fixed manufacturing overhead allocated to the pumps, 35% is avoidable if we switch to the outside supplier. . O Making pumps requires using a production line that is currently operating at its maximum capacity. Each pump takes 5 minutes on this production line. If we outsource the pumps, we can use the freed-up capacity in one of two ways. We can either: Increase our production and sales of PDK Detection kits. Each of these kit has a unit contribution margin of $230 and takes 10 minutes on the production line. The market for these kits is highly competitive; we can sell as many units as we would like at the prevailing market price. Alternatively, we an increase our production and sales of XFP Protein Extraction modules. Each of these modules has a unit contribution margin of $590 and takes 30 minutes on the production line. The market for these modules is highly competitive; we can sell as many units as we would like at the prevailing market price. O What would be the effect on our NOI this year if we outsourced the production of the specialized pumps to the outside supplier

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