Terpening Enterprises manufactures 1,000 units of pottery annually. The production costs for 1,000 vases are as follows:

Question:

Terpening Enterprises manufactures 1,000 units of pottery annually. The production costs for 1,000 vases are as follows:
Direct materials .......................................................... $ 20,000
Direct labor ................................................................ 55,000
Unit-related overhead ............................................... 35,000
Batch- related overhead ............................................ 5,000
Allocated facility-sustaining overhead ........................ 30,000
Total $ ....................................................................... 145,000
A supplier has offered to provide all 1,000 vases at a price of $ 175 per vase. If Terpening accepts the offer, it will rent the released space for an annual rental fee of $ 50,000. Should Terpening make or buy the vases? Why?