The Induction Company needs 10,000 units of a special component that will be used in the fabrication and manufacture of its unique induction cooktops. If the Induction Company buys the part from ZET Electronics instead of making it themselves, they could use the present facilities to manufacture a new product. Seventy per cent of fixed overhead costs will continue irrespective of what decision is made. The following data is available regarding the situation:

Cost of producing the component:
Direct labour	$25.00
Direct materials	5.00
Fixed overhead	15.00
Variable overhead	12.00
Total cost per component	$57.00

Cost of buying each component

$45.00

The Induction Company has a skilled workforce and operates its manufacturing facility in an area with high unemployment that has few other large businesses. The company's board is increasingly concerned about ESG issues when reporting its results

Required:

a) In deciding whether to make or buy the part, what are The Induction Company's total relevant costs to produce the part? What are the total relevant costs of buying the part from ZET Electronics? Explain your calculations.

b) Discuss which alternative (make or buy) is more financially desirable to the Induction Company and by what value? Explain.

c) Discuss any other relevant factors that the Induction Company should consider, and which may influence its decision.