MAKE OR BUY DECISION

Able Electrical, Inc. currently produces 15,000 units of Part 88 each year to use in its products. The costs for producing these parts are shown below:

Direct Materials$58,000

Direct Labor.. 74,000

Variable Overhead.27,000

Fixed Overhead..90,000

Total Cost $249,000

An outside supplier offers to sell Able Electrical the part for $14.00 apiece. If the part is bought from an outside supplier, Mason would save 40% on their fixed overhead cost for this part. Should they accept the offer? SHOW WORK FOR FULL CREDIT.