Orion Inc. needs 10,000 parts to use in its production cycle. Venus has offered to sell the parts to Orion for $44 each. However, 60% of Orions fixed overhead would still continue regardless of the decision made. The costs for Orion to make the part are:

Direct materials $12

Direct labour $26

Fixed overhead $10

What decision should Orion take?

Multiple Choice

• Make part, resulting in $40,000 cost advantage.

• Some other answer

• Make part, resulting in $20,000 cost advantage

• Buy part, resulting in $80,000 cost advantage

• Buy part, resulting in $40,000 cost advantage