Exhibit 22-2 JD Smith Company Is Operating at Less Than

question 64

Multiple Choice

Exhibit 22-2 JD Smith Company is operating at less than full capacity. The production manager is considering using this excess capacity to make a part that he usually buys. The full costs of manufacturing the part are as follows:
Up to now, the company has been buying 3,000 units of the part for a total of $115,000.
Refer to Exhibit 22-2. In deciding whether or not to make the part, JD Smith Company should use a differential unit cost figure of:

• A) $33
• B) $38
• C) $40
• D) $46