Part B: (9 marks)

Future Company has always made its electronic components that go into their GPS systems in-house.

Streeter Company has offered to supply these electronic components at a price of $38 each. Future Company uses 18,000 units of these components each year.

The cost per unit of this component is as follows:

Direct material	$13.75
Direct labor	$16.00
Variable overhead	$7.00
Fixed overhead	$8.25
Total	$45.00

Assume that 45% of Future Company's fixed overhead would be eliminated if the electronic component was no longer produced in-house.

Instructions:

Should Future Company continue to make the electronic component or buy it from Streeter Company. (show your calculation)