Canasi currently makes 10,000 units of part D with the following costs per unit: direct materials, $6; direct labor, $15; variable overhead, $6; and fixed overhead, $8. Eriksen has offered to sell Canasi 10,000 units of part D for $37 per unit. If Canasi accepts Eriksen’s offer, the released facilities could be used to save $20,000 in relevant costs in the manufacture of part M. In addition, $3 of the fixed overhead allocated to part D would be eliminated.
a. Indicate if any of the following is true.

● The $3 of the fixed overhead is irrelevant since the company has extra capacity.

● Canasi should buy the part from Eriksen and save $40,000.

b. Give one other fact that would be relevant to the decision.