Company A has to decide whether to manufacture internally or to buy or contract from outsiders.

Company A is able to contract with another company to supply them ready make at $5 each.

The details of Company A internal production costs are as follows:

Direct material/unit $2.00

Direct labor/unit $3.00

Variable production overhead $0.50

Fixed production overhead $0.50

Total production per unit cost $6.00

Required

Should Company A make or buy the product?