Spalding corporation has offered to sell 5000 units of the

Reference no: EM13481604

BirchCompany manufactures a part for its production cycle. Thecosts per unit for 5,000 units of this part are asfollows:

Directmaterials $3

Directlabor 5

Variable factoryoverhead 4

Fixed factoryoverhead 4

Total costs $16

The fixed factoryoverhead costs are unavoidable. Spalding Corporation has offered to sell 5,000 units of the same part to Birch Company for$15 a unit. Assuming no other use for the facilities, Birch Company should _____.

A. buy from ScaldingCorp to save $1 per unit
B. make the part tosave $1 per unit
C. buy from ScaldingCorp to save $3 per unit
D. make the part tosave $3 per unit

Reference no: EM13481604

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