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Python Systems manufactures component X to be used in its final product. Python...

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Python Systems manufactures component X to be used in its final product. Python incurred the following manufacturing costs when it produced 66,000 units last year: Direct Materials Direct Labour Variable Overhead Fixed Overhead Manufacturing cost $ 660,000 $ 132,000 $ 66,000 $ 410,000 $ 1,268,000 Python needs 80,000 Component X next year. Another company has offered to sell Python the Component X for $ 14 per unit. If Python outsources the Component X, they can use its idle capacities to manufacture another product that will contribute $ 130,000 operating income. Required: a. Based on the outsourcing proposal received and the demand Python needs for next year, Should Python Systems make or buy the component? Show your analysis. b. Independent of Part a, assume that Python cannot use the idle capacity to make other products but $ 120,000 of the fixed cost can be avoided by outsourcing production. Assume Python needs 73,000 instead of 66,000 units of Component X next year, what would Python do? c. In reference to (b), what is the most Python would be willing to pay to outsource Component X

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