Beal Company currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials $ 2 Direct labor 20 Variable overhead 10 Fixed overhead 16 Total $48 Pell, Inc. has contacted Beal with an offer to sell it 5,000 of the subassemblies for $36 each. If Beal makes the subassemblies, $6 of the fixed overhead per unit will be allocated to other products.
Instructions: Should Beal make or buy the subassemblies? Explain your answer.