Stufful Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows:

Direct materials	1.00
Direct labor	10.00
Variable overhead	5.00
Fixed overhead	8.00
Total	24.00

Burmy Company has contacted Stufful with an offer to sell them 5,000 of the subassemblies for 22.00 each. Stufful will eliminate 25,000 of fixed overhead if it accepts the proposal. Should Stufful make or buy the subassemblies? What is the difference between the two alternatives?

CHOICES: (SHOW SOLUTION)

Make; savings = 5,000

Make; savings = 60,000

Buy; savings = 50,000

Buy; savings = 20,000