Question

McMurphy Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 12,000 units of this part are as follows: 36) Direct materials Direct labor Variable factory overhead Fixed factory overhead $86,000 126,000 58,000 138,000 $408,000 Total costs Of the fixed factory overhead costs, $55,000 is avoidable. Conners Company has offered to sell 12,000 units of the same part to McMurphy Corporation for $41 per unit. Assuming there is no other use for the facilities, Schmidt should A) make the part, as this would save $14 per unit B) make the part, as this would save $16 per unit C) buy the part, as this would save the company $192,000 D) buy the part, as this would save $16 per unit

Answer 1

Answer:

the correct answer is

A) make the part, as this would save $14 per unit