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Mike or buy Decision Zion Manufacturing had always made its components in house. However, Bryce Component Works had recently offered to supply one component at a price of 25 each ones 10:500 units of Component each year. The cost per unit of this component is as follows $12.00 Direct materials Direct labor 11:25 Variable overhead 4.50 Find overhead 2.00 Total $26.75 Assume that of Zion Manufacturing's feed overhead for Component would be eliminated that component were no longer produced Required: 1. CONCEPTUAL CONNECTION 1 Zion decides to purchase the component from Bryce, by how much will operating income increase or decrome// Which alternative is better? 2. CONCEPTUA. CONNECTION Welly explain how increasing or decreasing the sigurn affects ons al section to make or purchase the component As the percentage of avoidable fixed cost inca (above, total relevant costs of making the components Coming the purchase desion to financially ping compared to the male option) than it was when the percentage was in other worths, as the percentage incremence between the chate and motion In ruilting in the purchase dechico being en attractive Alternatively, the promovable need a deces, the make" option eventually is tly and paling financially the purchwilion Finally, as the favodobleted cost de low cough and relevant to making the componenter the to becomes the more and all in option 1. CONCEPTUAL CONNECTION Dw much would the prevent.coot have to come before and indiferent care a contenen making vert purchasing the comport

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