Doggie Pals produces 100,000 dog collars each month that give off a fresh scent to keep your dog smelling clean between baths. Total manufacturing costs are $200,000. Of this amount, $175,000 are variable costs. What are the total production costs when 135,000 collars are produced? (Assume both production levels are in the same relevant range.)

Cuyahoga Valley Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 25,000 parts is $138,000, which includes fixed costs of $68,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.25 per unit, and avoid 30% of the fixed costs.Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold for $12,000 profit. If Cuyahoga Valley Bicycles makes the part, what will its operating income be? Would we make the part or buy it?