Beto Company pays $$4\mathrm{.}50$ per unit to buy a part for one of the products it manufactures. With excess capacity, the company is

considering making the part. Making the part would cost $$4\mathrm{.}20$ per unit for direct materials and $$1\mathrm{.}00$ per unit for direct labor.

The company normally applies overhead at the predetermined rate of $200\%$ of direct labor cost. Incremental overhead to

make the part would be $80\%$ of direct labor cost.

$($a$)$ Prepare a make or buy analysis of costs for this part. $($Enter your answers rounded to $2$ decimal places.$)$

$($b$)$ Should Beto make or buy the part?

$($b$)$ Company should:

Answer rating: 100% (QA)

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