Making or Buying Manufactured Parts The company currently makes a part used in the production of its best-selling product.

The company has the option to buy this same part from a supplier for $55 per part. The company uses 800 of these parts each period and has the following cost data for producing these 800 parts:

Should the company buy the 800 parts per period from the supplier or continue to make them?

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Direct labor Direct materials Variable manufacturing overhead Fixed manufacturing overhead, direct* Fixed manufacturing overhead, indirect* Cost per Unit $20 12 13 7 10 *Based on 800 units per period. If the parts are purchased from the supplier, the direct fixed manufacturing overhead costs can be avoided.