Ned Flanders Corporation makes 100,000 units per year of a plastic gasket for use in one of its products. Data concerning the unit production costs of one gasket follow: Direct Materials: $0.15

Direct Labor: $0.10

Variable Mfg Overhead: $0.13

Fixed Mfg Overhead: $0.24

Total Manufacturing Cost per Unit: $0.62

An outside supplier has offered to sell NFC all of the gaskets it requires. If Flanders Corporation decided to discontinue making and instead buys the gaskets, 25% of the above fixed mfg overhead costs could be avoided.

Assume NFC has no alternative use for the facilities presently devoted to production of the gaskets.

1. What are two considerations other than money that Flanders should think about before making the decision to make the component versus buying the component?
2. If the outside supplier offers to sell the gaskets to Flanders for $0.46 each, should NFC accept the offer to buy the gaskets or continue to make them? Fully support your answer using relevant cost analysis.