2 Make or Buy, Qualitative Considerations Problem 13-31 Howarth Dental is a large dental practice Currently, Howarth has its own dental laboratory to produce porcelain and gold crowns. The unit costs to produce the crowns are as follows: Gold Raw materials Direct labour Variable overhead Fixed overhead Porcelain $125 35 12 26 S198 $160 35 12 26 S233 Total Fixed overhead is detailed as follows: Salary (supervisor) Depreciation Rent (lab facility) S32,000 6,000 34,000 Overhead is applied on the basis of direct labour hours. These rates were computed by using 6,200 direct labour hours. I dental laboratory has offered to supply Howarth all the crowns it needs. Its price is A local S190 for porcelain crowns and $205 for gold crowns; however, the offer is conditional on supply- ing both types of crowns- it will not supply just one type for the price indicated. If the offer is accepted, the equipment used by Howarth's laboratory would be scrapped (it is old and has no market value), and the lab facility would be closed. Howarth uses 2,400 porcelain crowns and 650 gold crowns per year