Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing fi rm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 2,000 units):

Direct materials . . . . . . . . . . . . . . . . . . . . . . . $ 50

Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

Variable overhead . . . . . . . . . . . . . . . . . . . . . 32

Fixed overhead . . . . . . . . . . . . . . . . . . . . . . . 94

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $282

Trailblazers has offered to sell the assembly to Mobility for $220 each. The total order would amount to 2,000 rear wheel assemblies per year, which Mobilitys management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazerss offer would eliminate annual fi xed overhead of $80,000.

Required

Should Mobility make rear wheel assemblies or buy them from Trailblazers?

Prepare a schedule that shows the differential costs per rear wheel assembly?