Cruise 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 6300 units, are as follows: Assume Cruise Company can purchase 6300 units of the part from Suri Company for $14.30 each, and the facilities currently used to make the part could be used to manufacture 6300 units of another product that would have an $9 per unit contribution margin. If no additional fixed costs would be incurred, what should Cruise Company do?
A)Make the new product and buy the part to earn an extra $6.50 per unit contribution to profit.
B)Make the new product and buy the part to earn an extra $5.30 per unit contribution to profit.
C)Continue to make the part to earn an extra $2.10 per unit contribution to profit.
D)Continue to make the part to earn an extra $4.00 per unit contribution to profit.

Question

Cruise 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 6300 units, are as follows:  Assume Cruise Company can purchase 6300 units of the part from Suri Company for $14.30 each, and the facilities currently used to make the part could be used to manufacture 6300 units of another product that would have an $9 per unit contribution margin. If no additional fixed costs would be incurred, what should Cruise Company do?
A)Make the new product and buy the part to earn an extra $6.50 per unit contribution to profit. 
B)Make the new product and buy the part to earn an extra $5.30 per unit contribution to profit. 
C)Continue to make the part to earn an extra $2.10 per unit contribution to profit. 
D)Continue to make the part to earn an extra $4.00 per unit contribution to profit.

Quizplus · Accepted Answer

The Answer of Cruise 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 6300 units, are as follows:  Assume Cruise Company can purchase 6300 units of the part from Suri Company for $14.30 each, and the facilities currently used to make the part could be used to manufacture 6300 units of another product that would have an $9 per unit contribution margin. If no additional fixed costs would be incurred, what should Cruise Company do?
A)Make the new product and buy the part to earn an extra $6.50 per unit contribution to profit. 
B)Make the new product and buy the part to earn an extra $5.30 per unit contribution to profit. 
C)Continue to make the part to earn an extra $2.10 per unit contribution to profit. 
D)Continue to make the part to earn an extra $4.00 per unit contribution to profit.

Cruise Company Produces a Part That Is Used in the Manufacture