DeMarcus Industries manufactures a part used in several models of its automatic dishwashers Monthly production costs for 5.000 units are
Direct materials..............................................540000
Direct labour..................................................10.000
Variable support costs.......................................25.000
Fixed support costs..........................................20 000
Total costs......................................................12124
It is estimated that 20% of the fixed support costs assigned to the part will no longer be incurred it the company purchases the part from the outside supplier for 515 50 per unit
Required:
1. Considering all relevant information, what should DeMarcus do,
2. What other factors should DeMarcus take into consideration before making this decision?