Mighty Confectioners faces the decision of whether to make or buy specialty cupcakes. Manufacturing costs per unit for the cupcakes are direct materials, $0.50; direct labor $2; and variable overhead, $0.10. Fixed overhead is $1,600 per period. If the company buys the finished product at $2.00 per unit, the company will be able to lease out the facilities and earn $1,200 in lease revenue. Current and projected production calls for 8,000 cupcakes per period.

a. What is the monetary difference? Ignore taxes.

b. What other information should management consider?

c. What is the best course of action: buy the cupcakes or make them?