The management of Rainfree Limited must decide whether to continue manufacturing a part or to buy it from an outside supplier. The part is the mechanized arm of an umbrella the company manufactures.

An analysis of the accounting records and production data revealed the following for the past year:

The company produced $35,000$ mechanical arms.

Each mechanical arm requires $10$ minutes to produce. Three people in the Machining Department work full time producing the mechanical arms. Each person is paid $$12\mathrm{.}00$ per hour.

The cost of materials used in each mechanical arm is $$2\mathrm{.}00.$

Manufacturing costs directly related to the production of the mechanical arm are: supervision wages, $$7,500$; quality control, $$1,500$; amortization, $$1,800$; property taxes and insurance, $$1,000($allocated on the basis of factory space$).$

An outside firm is offering to sell the mechanical arm to Rainfree for $$4$ per unit. Freight charges will be $$0\mathrm{.}40$ per unit, and a part$-$time receiving clerk at $$8,500$ per year will be required.

If the mechanical arm is purchased, the excess space will be used to store Rainfree's finished products. Currently, Rainfree rents storage space at approximately $$0\mathrm{.}80$ per unit per year. Approximately $4,500$ units per year are stored in the rented space.

Required:

Should Rainfree make or buy the mechanical arm? Support your answer with calculations.