• Your business manufactures wearable technology (think Fitbit). Each wearable item requires a pulse monitor, which you can either make yourself or which can be purchased from an outside supplier for $65 per monitor. Currently you are making the 2,000 monitors you need with the following costs:

	Direct Materials		$40,000
	Direct Labor		50,000
	Variable Overhead		35,000
	Fixed Overhead		45,000

If you choose to buy the monitors, you will eliminate $28,000 of the variable overhead and $5,000 of the fixed overhead.

• Should you make or buy the pulse monitors, assuming there is no use for the freed-up manufacturing capacity?
• Should you make or buy the monitors if you can use the freed-up manufacturing capacity to add custom graphics to your wearable items? This addition would increase the contribution margin on the wear able items by $12,000 in total?