Answer:
If the company produces the units, it will save $4.
Step-by-step explanation:
First, we need to calculate the relevant cost of making the units in-house. We will consider only the incremental overhead cost:
Make in-house:
Direct material= 8
Direct labor= 24
Avoidable Overhead= 40*0.6= 24
Total cost= $56
Buying:
Total cost= $60
If the company produces the units, it will save $4.