$.$Chapman Corporation manufactures lamps. Management is currently studying whether the company should continue to make the cord assembly or purchase them from Graham Company for $$5\mathrm{.}25.$ Chapman needs $20,000$ cord assemblies a year. If the part is purchased, the company can not use the released facilities for another manufacturing activity.

Chapman$$s unit cost to manufacture the cord assembly is:

Direct materials $$2\mathrm{.}25$

Direct labor $1\mathrm{.}75$

Factory overhead $($Fixed$)2\mathrm{.}50$

Total $$6\mathrm{.}50$

Show calculation of differential analysis decision and advise Chapman Corporation of recommednation.