Make-or-Buy,

Traditional Analysis Wehner Company is currently manufacturing Part ABS-43, producing 58,000 units annually. The part is used in the production of several products made by Wehner. The cost per unit for ABS-43 is as follows:

Direct materials $44.95

Direct labor 10.90

Variable overhead 2.55

Fixed overhead 3.60

Total $62.00

Of the total fixed overhead assigned to ABS-43, $17,168 is direct fixed overhead (the annual lease cost of machinery used to manufacture Part ABS-43), and the remainder is common fixed overhead. An outside supplier has offered to sell the part to Wehner for $58.28. There is no alternative use for the facilities currently used to produce the part. No significant non-unit-based overhead costs are incurred.

Required: 1. Should Wehner Company make or buy Part ABS-43? Wehner should buy the part. This will produce total cost savings of

$_____________

2. What is the maximum amount per unit that Wehner would be willing to pay to an outside supplier? Round your answer to the nearest cent.

$_____________