ilma Company must decide whether to make or buy some of its components. The costs of producing 67,200 switches for its generators are as follows. Direct materials $30,200 Variable overhead $45,900 Direct labor $38,252 Fixed overhead $81,200 Instead of making the switches at an average cost of $2.91 ($195,552 67,200), the company has an opportunity to buy the switches at $2.67 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated.