Grouperman Corporation Currently Manufactures a Subassembly for Its Main Product

Essay

Grouperman Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 10 \\\text { Direct labor } & 10 \\\text { Variable overhead } & 7 \\\text { Fixed overhead } & \underline { 9 } \\\text { Total } & \underline { \underline { \$ 36 } }\end{array}$$ Fez Company has contacted Grouperman with an offer to sell it 7000 of the subassemblies for $30 each. If Fez makes the subassemblies $4 of the fixed overhead per unit will be allocated to other products.
Instructions
Should Grouperman make or buy the subassemblies? Explain your answer.