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Should Agler make or buy the subassemblies

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Question - Agler Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows:

Direct materials $1

Direct labor $10

Variable overhead $5

Fixed overhead $8

Total $24

Funkhouser Company has contacted Agler with an offer to sell it 4,000 of the subassemblies for $17 each. If Agler buys the subassemblies, $2 of the fixed overhead per unit will be allocated to other products.

Should Agler make or buy the subassemblies?

Reference no: EM132478917

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