A-6 Zion Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $13each. Zion uses 4,100 units of Component K2 each year. The cost per unit of this component is as follows:Direct materialsDirect laborVariable overheadFixed overheadTotalRequired:MakeBuy$7.41The fixed overhead is an allocated expense; none of it would be eliminated if production of Component K2 stopped.Differential Cost to Make2.96$1.731. What are the alternatives facing Zion Manufacturing with respect to production of Component K2?Make the component in-house or to buy it from Bryce2. List the relevant costs for each alternative. If required, round your answers to the nearest cent.4.00$16.10Total Relevant Cost16.10 X per unit13.00per unit3.10 X per unitIf Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease?Decrease12,510 X

Make or Buy is the decision making technique which helps the entity to decide the best possible…

Zion Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $13 each. Zion uses 4,100 units of Component K2 each year. The cost per unit of this component is as follows: Direct materials Direct labor Variable overhead Fixed overhead Total Make Buy Differential Cost to Make $ $7.41 The fixed overhead is an allocated expense; none of it would be eliminated if production of Component K2 stopped. Required: 1. What are the alternatives facing Zion Manufacturing with respect to production of Component K2? Make the component in-house or to buy it from Bryce ✓ 2. List the relevant costs for each alternative. If required, round your answers to the nearest cent. 2.96 1.73 4.00 $16.10 13.00 Total Relevant Cost 16.10 X per unit ✓per unit 3.10 X per unit If Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease? Decrease ✔ 12,510 X