San Antonio Corporation Manufacturers a Part for Its Production Cycle

question 58

Multiple Choice

San Antonio Corporation manufacturers a part for its production cycle. The costs per unit for 5,000 units of this part are as follows: Amarillo Company has offered to sell San Antonio Corporation 5,000 units of the part for $112 per unit. If San
Antonio Corporation accepts Amarillo Company's offer, total fixed costs will be reduced to $60,000. What alternative is more desirable and by what amount is it more desirable?
Alternative Amount

• A) Buy $100,000
• B) Buy $40,000
• C) Make $20,000
• D) Make $120,000

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