For Neo Crafty tools manufactures an electric motor that it users in several of

For Neo Crafty tools manufactures an electric motor that it users in several of its products. Management is considering whether to continue manufacturing the motors or to buy them from an outside source. The following information is available. 1. The company needs 10000 motors per year. The motors can be purchased from an outside supplier at a cost of $20 per unit. 2. The unit cost of manufacturing the motors is $42 computed as follows: Direct materials 96000 direct labor 120000 factory overhead variable 90000 fixed 114000 total manufacturing costs $ 420000. Costs per unit ($420000/10000 units) $42 3) discontinuing the manufacture of motors will eliminate all the raw materials and direct labor costs but will eliminate only 75 percent of the variable factory overhead costs. 4) if the motors are purchased from and outside source machinery used in the production of motors will be sold at its book value. Accordingly no gain or loss will be recognized. The sale of this machinery would also eliminate $4000 in fixed costs associated with depreciation and taxes. No other reductions in fixed factory overhead will result form discontinuing the production of motors. A) Prepare a schedule to determine the incremental cost or benefit of buying the motor from the outside supplier. Recommend or not. B) assume that if the motors are purchased from the outside source the factory space previously used to produce motors can be used to manufacture and additional 000 power trimmers per year. Power trimmers est contribution margin of $10 per unit. They have no effect on fixed factory overhead. Would this new assumption change your recommendation as to whether to make or buy the motors? Prepare a schedule showing the incremental cost or benefit of buying the motors from the outside source and using the factory space to produce additional power trimmers.