Exercise $12-3($Static$)$ Make or Buy a Component $[$LO$2]$

Current$-$Control Inc. manufactures a variety of electrical switches. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a switch to Current$-$Control for $$32$ per unit. To evaluate this offer, Current$-$Control has gathered the following information relating to its own cost of producing the switch internally:

$$Per Unit$12,000$ Units

per YearDirect materials$$12$$$144,000$Direct labour$10120,000$Variable manufacturing overhead$336,000$Fixed manufacturing overhead, traceable$8*96,000$Fixed manufacturing overhead, common, but allocated$16192,000$Total cost$$49$$$588,000$

$*25\%$ supervisory salaries; $75\%$ depreciation of special equipment $($no resale value$).$

Required:

$1-$a$.$ Assuming that the company has no alternative use for the facilities now being used to produce the switch, compute the total cost of making and buying the parts.