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.
-Assume that Speck can buy 10,000 units of the part from another producer for $30 each. The facilities currently used to make the part could be rented out to another manufacturer for $40,000 a year. Speck should
A) make the part as that would save $2 per unit.
B) buy the part as that would save $6 per unit.
C) buy the part as that would save $2 per unit.
D) make the part as that would save $6 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.
-Assume that Speck can buy 10,000 units of the part from another producer for $30 each. The facilities currently used to make the part could be rented out to another manufacturer for $40,000 a year. Speck should
A) make the part as that would save $2 per unit. 
B) buy the part as that would save $6 per unit. 
C) buy the part as that would save $2 per unit. 
D) make the part as that would save $6 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.
-Assume that Speck can buy 10,000 units of the part from another producer for $30 each. The facilities currently used to make the part could be rented out to another manufacturer for $40,000 a year. Speck should
A) make the part as that would save $2 per unit. 
B) buy the part as that would save $6 per unit. 
C) buy the part as that would save $2 per unit. 
D) make the part as that would save $6 per unit.

Speck Company Manufactures a Part for Its Production Cycle