Question 3: Jets Inc. makes football equipment. They have been buying one of the components to make their

football cleats, but have recently found out that a machine they already own (which has extra capacity) could

also be used to make the component. They calculated some costs related to manufacturing the 2,500

components they need and have found these numbers:

Direct Materials: $ 90,000

Direct Labor: $ 12,500

Variable MOH: $ 18,750

Fixed MOH: $ 40,000

Supervisor Salary: $ 75,000

Depreciation of Machine: $ 12,000

Rent for Factory Space: $ 16,000

Rent for Warehouse Space: $ 10,000

Jets Inc. currently pays $60,000 for their supervisor salary, $ 8,000 for warehouse rental, and they buy each

component for $60 each. Using the given information, please determine if Jets Inc. should continue to buy the

component or if they should make the component instead.