Lewis Auto Company manufactures a part for use in its production of automobiles. When 10,000 items are produced, the costs per unit are:

Direct materials $ 12

Direct manufacturing labor 60

Variable manufacturing overhead 24

Fixed manufacturing overhead 32

Total $128

Monty Company has offered to sell Lewis Auto Company 10,000 units of the part for $120 per unit. The plant facilities could be used to manufacture another part at a savings of $180,000 if Lewis Auto accepts the supplier's offer. In addition, $20 per unit of fixed manufacturing overhead on the original part would be eliminated.

Should Lewis Auto make or buy the part?

If Lewis Auto follows your advice from question 22, how much money will the company save?