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Problem2: 15 points Montana Corporation manufactures switches, an important part of the final finished product. The company reports the following information about the costs of making switches in the current year: Direct materials $156.000 Direct labor 132,000 Manufacturing overhead: Variable 168.000 144.000 Fixed Total manufacturing costs $ 600.000 Cost per unit($600.000 80.000 units)_$7.50 1. Each year the Montana Corporation needs 80,000 switches. This year an outside supplier has approached Montana about supplying the switches at 86 per mit 2. If the production of the switches were discontinued, all of the cost of direct materials and direct labor woulo be avoided, but the variable factory overhead costs would be reduced by only . Fixed factory costs would be reduced by $9.200. Discontinuing the production of switches will not affect other fixed tictory overhond costs. Required: On the basis of financini considerations alone, should Montana make the switches or buy them from the outsider supplier? Should your calenlation b. Now suppose that if the switches are purchased from the outside source, Montana could use the vacatel plan space previously used to produce switches to manufacture an additional 6.000 component B per year Component B have an estimated contribution margin of $18 per it. The fixed factory overhead would not be affected if additional component would be tianufactured. On the basis of financial considerations alone, should Montana make the switches or buy them frotu the outsider supplier Should your calculation

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