Redbud Company uses a certain part in its manufacturing process that it buys from an outside supplier for $36 per part plus another $5 for shipping and other purchasing-related costs. The company will need 18,000 of these parts in the next year and is considering making the part internally. After performing a capacity analysis, Redbud determined that it has sufficient unused capacity to manufacture the 18,000 parts but would need to hire a manager at an annual salary of $54,000 to oversee this production activity. Estimated production costs are determined to be as follows:

Direct material $28
Direct labor 12
Variable overhead 6
Fixed overhead (includes manager at $4 per unit) 10
Total unit cost $56

Required:
1. Identify the relevant costs to make this part internally. (Select all that apply)

a. Historical cost
b. Direct labor
c. Direct material
d. Variable overhead
e. Fixed overhead
f. New manager's salary

2. Should Redbud produce the part or continue to buy it from the outside supplier? (Select the right answer)
a. Redbud should produce the part.
b. Redbud is indifferent about the decision.
c. Redbud should continue to buy it from the outside supplier.