Harris Company Currently Produces a Component That It Uses in Making

Essay

Harris Company currently produces a component that it uses in making some of its products.Harris has calculated the following costs for making the component:
$$\begin{array} { l r } \text { Unit-level costs } & \\\text { Materials } & \mathbf { 2 0 } \\\text { Labor } & 28 \\\text { Overhead } & 2 \\\text { Allocated facility-level costs } & \underline {10} \\\text { Total cost } & \underline { \$6 0 } \\\end{array}$$ Harris is considering outsourcing the component.A supplier has offered to sell the component to Harris for $52 each.Harris needs 8,000 units each year.
Required:
Should Harris outsource the component? Support your answer with appropriate computations.