Part AEC104 is a part used in the production of blenders at AEC Corporation. The following costs and data related to the production of AEC105:

AEC Corporation can purchase the part from an outside supplier for $4 per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. Required:

What should the Company do? Should the Company make it or buy it? Why?

Number of parts produced annually 20,000 Fixed costs $39,000 Variable costs Total cost to produce $66.000 $105,000