Microline is considering buying computer cabinets from an outside vendor. Currently, Microline makes the cabinets in its own manufacturing facility. Microline can buy the cabinets for $15 each. The company uses 15,000 cabinets each year. Information about Microline’s cost to manufacture the 15,000 cabinets follows:

Required: Prepare a relevant cost schedule that indicates whether Microline should buy the cabinets or continue to make them.

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Direct material Direct labor Variable overhead Fixed overhead Total Per Unit $ 4 67 $22 Total $ 60,000 90,000 105,000 75,000 $330,000 Fixed cost for Microline would not change if the company stopped making the cabinets.