Use the Information Below to Answer the Following Question(s)

question 190

Multiple Choice

Use the information below to answer the following question(s) :
Spahr Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 5,000 units, are as follows:

-Assuming Spahr Company can purchase 5,000 units of the part from Sexton Company for $13 each, and the facilities currently used to make the part could be rented out to another manufacturer for $24,000 a year, what should Spahr Company do?

• A) Make the part and save $4.20 per unit.
• B) Make the part and save $2.20 per unit.
• C) Buy the part and save $0.80 per unit.
• D) Buy the part and save $1.80 per unit.

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