Max Company Uses 20,000 Units of Part a in Producing

question 157

Multiple Choice

Max Company uses 20,000 units of Part A in producing its products. A supplier offers to make Part A for $7. Max Company has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of not buying Part A from the supplier is

• A) $0.
• B) $20,000.
• C) $140,000.
• D) $160,000.