Make-or-buy, relevant costs and opportunity costFab Motors has manufactured compressor parts at its plant in Pitcairn, Indiana, for the past 25 years. An outside supplier, Superior Compressor Company, has offered to supply compressor module C38 at a price of $200 per unit. Current unit manufacturing costs for C38 are as follows:

Direct Materials................$ 80

Direct labor .......................60

Variable overhead ...........56

Fixed overhead...............17

_______

Total Costs$213

Required

(a)Should Superior Compressor's offer be accepted if the Pitcairn plant is presently operating below capacity?

Cost per unitMakeBuy.Cost Variance

Variable costs

Direct materials .........$80

Direct labor ..............$ 60

Variable overhead ...... $56

Fixed overhead ......... $17

Total Cost ............... $213$200$13

(b)What is the maximum acceptable purchase price if the plant facilities are fully used at present and if any additional available capacity can be deployed for the production of other compressors?