Cost Analysis for Make-or-Buy Decision: Cardinal Company needs 20,000 units of a certain part to use in its production cycle. Cardinal estimates the costs to make the part as follows:

The cost to buy the part from the Oriole Company is $36. Sixty percent of the fixed overhead applied to this product will continue regardless of what decision is made. What are the differential costs of the make-or-buy decision?

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Direct materials Direct labor Variable overhead Fixed overhead applied Total $ 4 16 8 10 $38