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please explain thoroughly 111 100% + CASE ASSIGNMENT 2 (7 points) Cat...

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Accounting

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111 100% + CASE ASSIGNMENT 2 (7 points) Cat Company makes 12,000 units per year of a part that it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct Materials Direct Labour Variable Manufacturing Overhead Fixed Manufacturing Overhead Unit Product Cost $11.70 $15.80 $4.30 $23.90 $55.70 An outside supplier has offered to sell the company all the parts that Cat needs for $57.20 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional segment margin on this other product would be $100,000 per year. If the part were purchased from the outside supplier, $20.70 of the fixed manufacturing overhead cost being applied to the part would continue QUESTION 1 Should Cat Company make the product or purchase it from the outside supplier? (Show all calculations) (6 points) QUESTION 2 What is the decision rule for this type of scenario? (1 point) ch 8C DELL 52 F3 4 F4 K F5 F6 FZ FB F9 F10 F11 F12 A % A # & *

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