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Hart Company produces a part that is used in the manufacture of one of its products. The costs associated with the production of 5,000 units of this part are as follows:
Direct materials $120,000
Direct labor 170,000
Variable factory overhead 75,000
Fixed factory overhead 160,000
Total costs $525,000
Question 1: Of the fixed factory overhead costs, $70,000 are avoidable. Hart Company has offered to sell 5,000 units of the same part to Hart for $86.50 per unit. Assuming there is no other use for the facilities, should Hart Company make or buy the part?
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