Exhibit 22-3 Shasta Company Is Operating at Less Than Full

question 54

Multiple Choice

Exhibit 22-3 Shasta 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 2,000 units of the part for a total of $124,000.
Refer to Exhibit 22-3. In deciding whether or not to make the part, Shasta Company should use a differential unit cost figure of:

• A) $46
• B) $58
• C) $64
• D) $76

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