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 overhead $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 suppliers offer. In addition, $20 per unit of fixed manufacturing overhead on the original part would be eliminated.

Required:

a. What is the relevant per unit cost for the original part?

b. Which alternative is best for Lewis auto Company? By how much?