NHS needs 2,000 motors in its production of autos. It can buy the motors from KLM Motors for $2,500 each. NHSs plant can produce the motors for the following costs per unit:

Direct materials $1000

Direct manufacturing labor 500

Variable manufacturing overhead 400

Fixed manufacturing overhead 700

Total $2,600

If Southwestern buys the motors from KLM, 70% of the fixed production overhead applied will not be avoided.

Required: A. Should the company make or buy the motors?

B. What other factors should NHS consider in determining whether to make or to buy?