Each year, Mother Company purchases 8,000 units of a part that it needs for production of its product.The supplier notified Blue Company that a price increase will take effect shortly, which will bring the price of the part to $25 per part.Blue Company is considering the use of idle facilities to produce the part.The annual production costs to produce the needed 8,000 parts are as follows:

Direct materials$17,500

Direct labor30,000

Indirect production costsvariable14,000

Indirect production costsfixed33,500

The idle facilities could also be rented out at an annual rent of $99,000.All the fixed indirect production costs are avoidable.

Required:

Determine if Blue Company should buy the part or produce it internally.