a. Make or Buy Terry Inc. manufactures machine parts for aircraft engines. CEO Bucky Walters is considering an offer from a subcontractor to provide 2,300 units of product OP89 for $110,400. If Terry does not purchase these parts from the subcontractor, it must continue to produce them in-house with these costs:

Costs per Unit

Direct materials $25

Direct labor 14

Variable overhead 12

Allocated fixed overhead 5

Required: Calculate the relevant cost for producing the product.

Calculate the relevant cost for producing the product.

Calculate the additional cost or savings of producing the product internally versus purchasing the product externally, from a supplier..

Additonal cost of producing internally