Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top-selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with the production of 20,000 oat bars currently.

Direct material $14,000

Direct Material labor $6,000

Manufacturing Overhead $8,000

Total $28,000

The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs.

Should Oat Treats make or buy the oat bars? Show your work supporting your decision. Calculation show for more understanding.