Exercise 7-8 Your answer is partially correct. Try again. The Page Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below: Cost per Unit Variable costs Direct material $958 Direct labor 701 Variable overhead 285 $1,944 Total variable costs Fixed costs Depreciation of equipment 486 Depreciation of building 183 292 Supervisory salaries Total fixed costs 961 $2,905 Total cost The company has an offer from Duvall Valves to produce the part for $2,154 per unit and supply 1,100 valves (the number needed in the coming year). If the company accepts this offer and shuts down production of valves, production workers and supervisors will be reassigned to other areas where, unfortunately, they really are not needed. The equipment cannot be used elsewhere in the company, and it has no market value. However, the space occupied by the production of the valve can be used by another production group that is currently leasing space for $54,490 per year Should the company make or buy the valve? make cost of buying valves is Total incremental The company should the valves