Soho Company manufactures a two-in-one video system consisting of a DVD player and a digital media receiver. The costs per unit when 10,000 DVD players are produced are:

Direct materials $15

Direct manufacturing labour 63

Variable manufacturing overhead 25

Fixed manufacturing overhead 33

Total $136

Broadfield Inc, a manufacturer of DVD players, offers to sell to Soho Company 10,000 DVD players for $125. The plant facilities could be used to manufacture another part at a savings of $180,000 if Soho Company accepts the offer. In addition, $20 per unit of fixed manufacturing overhead on the original part would be eliminated.

Required:

Should Soho Company make or buy the part? Show calculations.