The North Pole manufactures parts for lawnmowers, a top gift item on big kids Christmas lists 1,000 items are produced with costs per unit as follow:

Direct Materials $12

Direct Labor 60

Variable overhead 32

Fixed overhead 24

Total cost per unit $128

Monty Company has offered to sell to the North Pole 1,000 units of $120 per unit. The North Poles manufacturing plant could be used to manufacture another part for the incremental income of $14,000 if the North Pole accepts Montys offer.

Determine the cost involved under each alternative. Which alternative is best for the North Pole? By how much? Please explain briefly