s been purchasing a key component used in its production process from an outside supplier at a cost of $50 per unit. The company is currently producing 10,000 units of the component per year. The following costs are associated with the production of the component: Direct materials $15 per unit Direct labor $10 per unit Variable manufacturing overhead $5 per unit Fixed manufacturing overhead (allocated) $20 per unit Total $50 per unit An outside supplier has offered to sell the component to Lexington Technologies for $45 per unit. If the company accepts this offer, the facilities currently being used to produce the component could be used to produce another product that would contribute an additional profit of $15,000. A. Prepare a differential analysis report for the make-or-buy decision. B. On the basis of the data presented, would it be advisable to make or buy the component? Explain.