To make a batch of 1,000 units, it is estimated that 120 direct labor hours are required at a cost of \($10\) per hour.

Direct material costs are estimated at \($1,500\) per batch. The overhead costs are calculated based on an overhead rate of \($7.50\) per direct labor hour. The item can be readily purchased from a local vendor for \($4\) per unit.

a. Should the item be manufactured or purchased?

b. What is the break-even value for the overhead rate (dollars per direct labor hour)? Assume that the material costs, labor hours, and labor costs do not change.