Drapers Corporation, a high-end digital camera manufacturer, currently purchases a component part from an outside company at a price of $141 per unit. While the quality of the component has always been very high, Drapers Corporation's management believes it might be possible to produce a superior component internally at a cost lower than $141. The accounting department has provided an estimate of the per-unit manufacturing cost of the component.
Direct materials...........................................77
Direct labor................................................45
Variable factory overhead..............................25
Fixed factory overhead..................................30
...................................................................$177
The company's controller believes that the estimate may be incorrect, because Drapers Corporation has excess manufacturing capacity to produce the components without incurring additional fixed factory overhead. What per-unit manufacturing cost should be used in determining whether Drapers Corporation should purchase the components from an outside company or manufacture them internally?$_______
Complete the table below to compare the per-unit cost for Drapers Corporation to make the component and the per-unit cost to buy the component. If an amount is zero, enter "0".

Based on your analysis, it is better for Drapers Corporation to buy the component. Doing so will save the company $____ per unit.

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Alternatives Differential Cost to Make Buy Make Direct materials Direct labor Factory overhead Purchase cost Total relevant cost %24 %24 %24 %24 %24 %24 %24