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?

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

Question

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?

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

Quizplus · Accepted Answer

The Answer of 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?

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

San Antonio Corporation Manufacturers a Part for Its Production Cycle