ABC has determined it can manufacture the new valve product
internally for $27,000 in fixed costs (FC) and $8 variable costs (VC) per unit.
The company president has estimated ABC will sell 4,800 (unit volume = UV) of
these valves each year. Jay Production, a small but highly reputable company
specializing in outsourced mechanical manufacturing, has contacted ABC’s
president, and offered to manufacture this new valve for ABC for an annual fee
of $29,000 plus $6 per unit.

Provide the algebraic equation for determining the total
annual manufacturing cost (TC) of the valve (using TC, FC, VC, and UV as
variables).

Calculate and provide the total annual manufacturing cost if
the valve is manufactured by ABC.

Calculate and provide the total annual manufacturing cost if
Jay manufactures the valve.

Indicate which is better from a total annual manufacturing
cost standpoint.