Tanner Company currently pays $14 per unit to buy a part for a product it manufactures. Instead, Tanner could make the part for per unit costs of $6 for direct materials, $4 for direct labor, and $2 for incremental overhead. Tanner normally applies overhead costs using a predetermined rate of 200% of direct labor cost. Should Tanner make or buy the part?

Multiple Choice

• Buy the part as the cost to buy it is $8 less than the cost to make it.

• Buy the part as the cost to buy it is $4 less than the cost to make it.

• Make the part as the cost to make it is $4 less than the cost to buy it.

• Buy the part as the cost to buy it is $2 less than the cost to make it.

• Make the part as the cost to make it is $2 less than the cost to buy it.