ABC Co. currently manufactures a subassembly for its main product.The costs per unit are as follows:

Direct materials $1, Direct labour $10, Variable overhead $5, Fixed overhead $8.

XYZ Co. has contacted ABC Co. with an offer to sell it 4,000 of the subassemblies for $17/ unit.If ABC Co. buys the subassemblies, $2 of the fixed overhead per unit will be allocated to other products.

Should ABC Co. make or buy the subassemblies?