Calc, Inc. owns a machine that produces baskets for the gift packages the company sells. The company uses 1,000 baskets in production each month. The costs of making each basket are as follows: $4 for direct materials $3 for variable manufacturing overhead $2 for direct labor $5 for fixed manufacturing overhead. The unit cost is based on the monthly production of 1,000 baskets. The company determined that all of variable costs and 30% of the fixed manufacturing overhead will be eliminated (avoided) if purchased. An outside supplier has offered to sell Calc the baskets for $12 each and can supply all the units it needs. However, if baskets are purchased, freight and inspection costs would be $0.50 per unit paid by Calc, Inc. Questions: 1) What are the total costs of making baskets? (4 points) 2) What are the total costs by purchasing the baskets from an outside supplier? (4 points) 3) What is the incremental income (loss)? Please prepare an incremental analysis (4 points). 4) Should Calc Inc. make or buy the baskets from the supplier? Why? (3 points) 5) Assuming through buying the baskets, Calc Inc. can use the released productive capacity to generate an additional income of $5,000 from producing a different product. Prepare an incremental analysis if the released productive capacity will generate an additional income of $5,000. Will the company make or buy this time? Why? (5 points) 6) List at least 2 nonfinancial factors should management consider in making its decision? (5 points). T T T Arial - 3 (12pt) T