Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 50,000 units of RX5 follows.

Direct Materials	$ 5.00
Direct Labor	8.00
Overhead	9.00
Total Cost per unit	$ 22.00

Direct materials and direct labor are 100% variable. Overhead is 80% fixed. An outside supplier has offered to supply the 50,000 units of RX5 for $18.00 per unit.

Required:

1. Determine whether the company should make or buy the RX5. Show computations