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Begonia uses part 87A in the production of color printers. Unit manufacturing costs for part 87A are: Direct materials $10 Direct labor 3 Variable overhead

Begonia uses part 87A in the production of color printers. Unit manufacturing costs for part 87A are:

Direct materials $10

Direct labor 3

Variable overhead 2

Fixed overhead 4

Begonia uses 130,000 units of 87A per year. Benzyl Company has offered to sell Begonia 130,000 units of 87A per year for $18. Fixed overhead is unavoidable.

Should Begonia make or buy the part?

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