The Calcutta Corporation produces a large number of products. The costs per unit for one product, a fishing reel, are shown below: LO1 Prime costs ( direct materials and direct labor ) . $7.00 Variable factory overhead . 4.00 Fixed factory overhead . 2.00 The company recently decided to buy 10,000 fishing reels from another manu¬

facturer for $12.50 per unit because “it was cheaper than our cost of $13.00 per unit.” Evaluate the decision only on the basis of the cost data given.