The Nucor Steel Company is considering closing its plant in Ahoskie, NC, and buying a part it makes there from another manufacturer. Here is the data is it will use in its analysis:

Direct Materials cost $2 per unit to make in Ahoskie

Direct Labor costs $3 per unit to make in Ahoskie

Variable Overhead $2 per unit to make in Ahoskie

The product can be purchased for $6 from the manufacturer.

Calculate whether cost is lower if the product is made or bought, and show all work. What does the analysis show the company should do? Write at least one sentence providing a reason the company might choose the other (more expensive ) alternative anyway.