Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent:

Direct materials $8,400

Direct labor 11,250

Variable overhead 12,600

Fixed overhead 16,200

Total costs 48,450

An outside supplier has offered to sell Clemente the subcomponent for $4 a unit.

1- If Clemente accepts the offer and purchases 10,000 units of a subcomponent from the outside supplier, all the variable costs will be eliminated and the fixed overhead costs of $16,200 will remain. compute the costs to make and the costs to purchase, and then decide should we make or buy.

2- consider the opportunity costs now. If Clemente accepts the offer, it could use the production capacity to produce another product that would generate additional income of $4500. Compare the costs to make and the costs to purchase , and then decide should we make or buy.