please dont provide answer in image format thank you Mohave Corporation is considering outsourcing production of the umbrella tote bag included with some of its products. The companyhas received a bid from a supplier in Vietnam to produce 8,600 units per year for $9.00 each. Mohave the following information aboutthe cost of producing tote bags:Direct materialsDirect laborVariable manufacturing overheadTixed manufacturing overheadTotal cost per unitMohave determined all variable costs could be eliminated by outsourcing the tote bags, while 60 percent of the fixed overhead cost isunavoidable. At this time, Mohave has no specific use in mind for the space currently dedicated to producing the tote bags.Required:1. Compute the difference in cost between making and buying the umbrella tote bag.2. Based strictly on the incremental analysis, should Mohave buy the tote bags or continue to make them?3-a. Suppose the space Mohave currently uses to make the bags could be utilized by a new product line that would generate $12,000in annual profits. Recompute the difference in cost between making and buying the umbrella tote bag.3-b. Does this change your recommendation to Mohave?Complete this question by entering your answers in the tabs below.Req 1Reg 2Req 3A$5.002.001.001.50$ 9.50Req 38Compute the difference in cost between making and buying the umbrella tote bag.Differential Cost of Making Versus BuyingReg 1Req 2 >

This pertains to relevant costs. Relevant costs are those costs that change when a decision is made.

Mohave Corporation is considering outsourcing production of the umbrella tote bag included with some of its products. The company has received a bid from a supplier in Vietnam to produce 8,600 units per year for $9.00 each. Mohave the following information about the cost of producing tote bags: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per unit $5.00 2.00 1.00 1.50 $9.50 Mohave determined all variable costs could be eliminated by outsourcing the tote bags, while 60 percent of the fixed overhead cost is unavoidable. At this time, Mohave has no specific use in mind for the space currently dedicated to producing the tote bags. Required: Compute the difference in cost between making and buying the umbrella tote bag. 2. Based strictly on the incremental analysis, should Mohave buy the tote bags or continue to make them? 1-a. Suppose the space Mohave currently uses to make the bags could be utilized by a new product line that would generate $12,000 annual profits. Recompute the difference in cost between making and buying the umbrella tote bag. -b. Does this change your recommendation to Mohave?