Armidale Innovations manufactures cars. For 2016, the operations manager, Jack, puts an estimate that the company will need 1,290 steering wheels for its all cars. Jack is evaluating two alternatives: He can either purchase all steering wheels required for 2016 from Tamworth Manufacturing at a price of $1,301 per unit; OR, he can manufacture the required number of steering wheels in-house at the Armidale Innovations own manufacturing plant at the following per unit cost:

Direct materials                            $499

Direct labour (manufacturing)       $249

Variable overhead (manufacturing) $199

Fixed overhead (manufacturing)      $349

Total cost (per unit):                      $1,296

If Armidale Innovations decides to buy all steering wheels from Tamworth Manufacturing, 69% of its currently committed fixed overhead (manufacturing) will not be avoided/eliminated.

Which alternative should Armidale Innovations choose?