Bozor Inc. manufactures machine parts for aircraft engines. As the CFO, you are considering an offer from a subcontractor to provide 2,000 units of product JD89 for $120,000. If Terry does not purchase these parts from the subcontractor, it must continue to produce them in-house. Data regarding this decision is given below.

Data
Subcontractor Bid: Part JD89
Number of units		2,000	(given)
Subcontractor bid price		$120,000	(given)
Full production cost information:
			Cost/Unit
Direct materials		$28.00	(given)
Direct labor			$18.00	(given)
Variable overhead		$16.00	(given)
Allocated fixed overhead		$4.00	(given)
			$66.00

Required:To earn full or partial marks, you need to show all calculations in good form.

1. What is the relevant cost (per unit, rounded to the nearest whole number) to make the product internally?

2. What is the estimated increase or decrease in short-term operating profit of producing the product internally versus purchasing the product from a supplier?

3. What are some of the additional information you need to consider in a make or buy situation?