Font Paragraph Styles Make/Buy Problem Starwood Aviation produces an executive jet for which it currently manufactures an airflow lever. The cost of each lever is indicated below: Variable costs Direct material $300 Direct labor 200 Variable overhead 150 Total variable costs $650 Fixed costs Depreciation of equipment 120 Depreciation of building 80 Supervisory salaries 140 Total fixed costs 340 Total cost $990 The company has an offer from Lans Levers to produce the part for $700 per unit and is able to supply the 600 levers needed in the coming year. If the company accepts this offer and shuts down production of levers, supervisors will be reassigned to other areas needing their services. The equipment cannot be used elsewhere in the company, and it has no market value. However, the space occupied by the production of the lever can be used by another production group that is currently leasing space for $21,000 per year. Should the company should make or buy the lever? Why? E DEX arch O di A a