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What is the total cost savings would result

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Best Guitars, Inc., has offered to sell 12,000 units of the same part to Taylor for $22 per unit. 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, $3 per unit of the fixed overhead applied to the part would be totally eliminated.

Question A. What should Taylor's decision be, and what is the total cost savings that would result?

Buy , 78600
Make , 78600
Make, 60600
buy, 60600

Question B. In the decision to make or buy the part, what is the relevant fixed overhead?

$84,000
$41,400
$53,400
$29,400

Reference no: EM132490377

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