Robbins Co. has been producing a part for a camera they manufacture.

The costs for this part are as follows: Fixed costs $392,000 Total variable costs $112,000 Units produced 28,000

Robbins has an opportunity to purchase this part rather than manufacture it.

To purchase the part will cost $5 a unit. If the part is purchased, fixed costs will be reduced by 20%.

Should Robbins Co. make or buy this part? Show how you arrived at your decision.