Peluso Company, a manufacturer of snowmobiles, is operating at 70% of plant capacity. Peluso's plant manager is considering making the 5,000 headlights it sells each year now being purchased from an outside supplier for $33 each. The Peluso plant has idle equipment that could be used to manufacture the headlights. The design engineer estimates that each headlight requires $9.50 of direct materials, $14 of direct labor, and $14.25 of manufacturing overhead. Forty percent of the manufacturing overhead is a fixed cost that would be unaffected by this decision.

The relevant cost of making each headlight is

Group of answer choices

$32.05

$37.75

$23.50

$28.30

A decision by Peluso Company to manufacture the headlights should result in a net gain (loss) for each headlight of (Do not round your intermediate calculations)

Group of answer choices

$3.05

$4.75

$0.95

$10.50

If Peluso chooses to buy the part, it will be able to rent the excess factory space for $5,000. Given this additional opportunity, should Peluso make or buy the part?

Group of answer choices

Make

Buy