Taylor Manufactures 12,000 Units of a part used in its production to manufacture guitars. The annual production activities related to this part are as follows:
- Direct Materials, $24,000
- Direct Labor, $66,000
- Variable Overhead, $54,000
- Fixed Overhead, $84,000
Best Guitars, Inc., has offered to sell 12,000 units of the same part to Taylor for $22 per Unti. If taylor were to accept the offer, some of the facilities presently used to manufacture the part could be rented to a third party at an annual rental of $18,000. Moreover, $4 per unit of teh fixed overhead applied to the part would be totally eliminated.
In the decision to make or buy the part, What is the relevant fixed overhead?