40. Solomon Company manufactures 30,000 components per year. The manufacturing cost per unit of the components follows: Direct materials $10, Direct labor $8, Variable overhead $4, and General Fixed overhead *$3 for a Total unit cost $25.
**Assume that the fixed overhead reflects the allocated cost of Solomon’s manufacturing facility to this component.
Solomon Company manufactures many different types of components, which will still be manufactured if Solomon Company buys the XYZ Component. An outside supplier has offered to sell the component to Solomon for $23.
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