Oddish Corporation is presently making Part K36 which is used in one of its products. A total of 8,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Direct Materials 5.00 Direct Labor 2.40 Variable Manufacturing Overhead 3.70 Supervisors Salary 1.80 Depreciation of special equipment 6.10 Allocated general overhead 2.40 An outside supplier has offered to make and sell the part to the company for 14.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. What do you recommend?

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Oddish Corporation is presently making Part K36 which is used in one of its products. A total of 8,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: An outside supplier has offered to make and sell the part to the company for F14.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. What do you recommend? Buy, net disadvantage to make would be P15,200 per year Buy, net disadvantage to make would be F52,800 per year Make, net disadvantage to buy would be 52,800 per year Make, net disadvantage to buy would be 15,200 per year