Speck Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows:
The fixed factory overhead costs are unavoidable.
-Troxel Company has offered to sell 10,000 units of the same part to Speck for $26 a unit. Assuming no other use for the facilities, Speck should
A) buy from Troxel as this would save $2 per unit.
B) make the part as this would save $2 per unit.
C) buy from Troxel as this would save $10 per unit.
D) make the part as this would save $10 per unit.

Question

Speck Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows:
  The fixed factory overhead costs are unavoidable.
-Troxel Company has offered to sell 10,000 units of the same part to Speck for $26 a unit. Assuming no other use for the facilities, Speck should
A) buy from Troxel as this would save $2 per unit. 
B) make the part as this would save $2 per unit. 
C) buy from Troxel as this would save $10 per unit. 
D) make the part as this would save $10 per unit.

Quizplus · Accepted Answer

The Answer of Speck Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows:
  The fixed factory overhead costs are unavoidable.
-Troxel Company has offered to sell 10,000 units of the same part to Speck for $26 a unit. Assuming no other use for the facilities, Speck should
A) buy from Troxel as this would save $2 per unit. 
B) make the part as this would save $2 per unit. 
C) buy from Troxel as this would save $10 per unit. 
D) make the part as this would save $10 per unit.

Speck Company Manufactures a Part for Its Production Cycle