Flyaway Company also has the Cyclone fan model. It is the company’s top-selling model with sales of 30,000 units per year. This model has a dual fan as well as a thermostat component that causes the fan to cycle on and off depending on the room temperature. Flyaway has always manu¬ factured the thermostat component but is considering buying the part from a supplier.

It costs Flyaway \($5\) to make each thermostat (\($3\) variable and \($2\) fixed). Mostat Co. has offered to sell the component to Flyaway for \($4\). Flyaway’s decision to purchase the part from Mostat would eliminate all variable costs but none of the fixed costs. Flyaway has no other pos¬ sible uses for the area currently dedicated to the thermostat production.

Determine whether Flyaway should continue to make the thermostat or purchase the part from Mostat Co. Justify your answer.