Panther Plastics manufactures iPhone covers. Bruxie Company has approached Panther Plastics with a proposal to sell the company iPhone covers at a price of $125,000

for 117,500 covers. Panther Plastics is currently making these components in its own factory.

The following costs are associated with this part of the process when 117,500 covers are produced:

Direct materials. $ 49,250 Direct labor 42,500

Manufacturing overhead. 60,000

Total $151,750

The manufacturing overhead consists of $40,500 of costs that will be eliminated if the covers are no longer produced by Panther Plastics. Should Panther accept the offer? Explain. Show your work for full credit.