Exercise 187

Agler Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows:

Direct materials	$	1
Direct labor	10
Variable overhead	5
Fixed overhead	8
Total	$	24

Funkhouser Company has contacted Agler with an offer to sell it 4,000 of the subassemblies for $17 each. If Agler buys the subassemblies, $2 of the fixed overhead per unit will be allocated to other products.

Should Agler make or buy the subassemblies?

Agler should makebuy to save $ per unit.