Kobe Company manufactures a part for its production cycle. The costs per unit for 20,000 units of this part are as follows:

Direct materials $15

Direct labor 12

Variable factory overhead 20

Unavoidable fixed factory overhead 18

Total cost $65

The Kobe Company has been approached by a supplier who claims it can sell Kobe Company 20,000 units of the same part for $940,000.

Required:

a. Assuming there is no alternative use for the facilities, how much money would Kobe Company save by buying the part?

b. Assuming the facilities can be rented out for $10,000 per year, should Kobe Company buy the part, and if so, how much money would be saved?

c. Are there any other factors Kobe Company should consider?