Answer the Following Questions Using the Information Below:
Nullabor Corporation

question 84

Multiple Choice

Answer the following questions using the information below:
Nullabor Corporation produces a part that is used in the manufacture of one of its products.The costs associated with the production of 10 000 units of this part are as follows:
$$\begin{array} { l r } \text { Direct materials } & \$ 45000 \\\text { Direct labour } & 65000 \\\text { Variable factory overhead } & 30000 \\\text { Fixed factory overhead } & \underline { 70000 } \\\quad \text { Total costs } & \underline{\$ 210000 }\\\end{array}$$ Of the fixed factory overhead costs,$30 000 is avoidable.
-Phil Company has offered to sell 10 000 units of the same part to Nullabor Corporation for $18 per unit.Assuming there is no other use for the facilities,Nullabor should:

• A)buy the part,as this would save $3 per unit.
• B)buy the part,as this would save the company $30 000.
• C)make the part,as this would save $3 per unit.
• D)make the part,as this would save $1 per unit.

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