Tam Computer Company currently manufactures the disk drives it uses in its computers. The costs of produce 5,000 of these disk drives last year were as follows:
Sunn Electronics has offered to provide Tam with all of its disk drive needs for $27 per drive. If Tam accepts this offer, Tam will be able use the freed up space to generate $40,000 of income each year in the production of its computer keyboards. In addition, $8 per drive of the other costs above could be totally eliminated. Based on this information, would Tam be better off to make the drives or buy the drives and by how much?