The company is planning to introduce a new engine. The engine requires a special part that the company can either make or buy from an outside supplier. The lowest outside price for the part is $98,000 per unit. If the part is produced internally, the company will have to purchase new equipment that will yield annual depreciation of $124,800. The company will also need to rent a new production facility at $204,000 a year. Fixed overhead is allocated to all production using a predetermined overhead rate of 60% of direct labor. However, the allocated fixed overhead costs would not be avoided if the part were not produced. The company plans to produce 24 engines with this part per year. A preliminary analysis of the annual costs to produce 24 parts would be as follows:

Direct materials	840,000
Direct labor	1,008,000
Variable overhead	288,000
Equipment depreciation	124,800
Building rental	204,000
Allocated fixed overhead	604,800

Required:

1. Calculate the incremental cost to produce 24 units of this part. There are no opportunity costs.
2. Calculate the total cost to buy 24 units of the part.
3. Compare the incremental cost to produce the part vs. the cost to buy it.
4. Decide whether it is better for the company to make or buy this part? Please explain your answer.
5. Show your answers, calculations and explanations in the space provided below.