Beto Company pays $4.70 per unit to buy a part for one of the products it manufactures. With excess capacity, the company is considering making the part. Making the part would cost $4.50 per unit for direct materials and $1.00 per unit for direct labor. The company normally applies overhead at the predetermined rate of 200% of direct labor cost. Incremental overhead to make the part would be 80% of direct labor cost. Required:
a. Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.)
b. Should Beto make or buy the part?