Basin Ltd currently makes the motherboards used in its laptop computers. Unit costs for manufacturing the motherboards are:

Unit Costs Direct Material $ 120

Direct Labor $ 80

Variable Overhead $50

Fixed Overhead $100

Total $ 350

The Make or Buy Decision An outside supplier has offered to provide the motherboards at a cost of $300 each plus a $5 shipping charge per motherboard. Twenty percent of the fixed overhead will be avoided if the motherboards are purchased. MicroTech has no alternative use for the facilities.

Q : What should Basin Ltd do, Make or Buy?