You are up for promotion to Plant Manager. All candidates for the position have been given information related to the production of the companys premier product, Extreme Slime.

Data:

A component used in the production of Extreme Slime is being evaluated to see if the part should be made in house, or purchased from an outside supplier. The outside supplier has said the purchase price would be $68 and $6 for shipping each part. We will need 10,000 of these parts in the next year. If the part is made in house, a manager will be hired at an annual salary of $40,000 to oversee this area of production. It is estimated that the costs to manufacture the part will be:

Direct materials $34

Direct labor $24

Variable manufacturing overhead $12

Fixed manufacturing overhead $10 (including the managers salary per unit)

Total unit cost $80