The management of Garvin Industries is evaluating whether the company should continue manufacturing a component or buy it from an outside supplier. Based upon its accounting records, it appears that it costs the company $80 per unit to make the component. The $80 cost per component was determined as follows:
Direct Materials	$16
Direct Labor	30
Variable manufacturing overhead	$12
Fixed manufacturing overhead	22
Unit Cost	80
Garvin industries uses 10,000 components per year. After Stison, Inc. submitted a bid of $70 per component, some members of management felt they could reduce costs by buying from outside and discontinuing production of the component.
Should Garvin Industries make or buy the component? Include supporting calculations