AYZ Corp. manufactures and sells computers. It makes some of the parts and purchases others. The engineering department believes that it might be possible to cut costs by manufacturing one of the parts currently being purchased for $8.25 each. The firm uses 100,000 of these parts each year, and the accounting department compiles the following list of annual costs based on engineering estimates.

Fixed costs will increase by $50,000

Labor costs will increase by $125,000

Factory overhead will increase by 45% of the increase fixed and labor costs (not given)

Raw material for making the parts will cost $600,000

Should AYZ Corp. continue to purchase these parts or manufacture them themselves? Show work to justify your decision.