1 a) Marigold Company uses 10600 units of Part A in producing its products. A supplier offers to make Part A for $6. Marigold Company has relevant costs of $9 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of buying Part A from the supplier is

A

$0.

B

$31800.

C

$63600.

D

$95400.

b)

Marigold Company manufactures widgets. Cullumber Company has approached Marigold with a proposal to sell the company widgets at a price of $60000 for 100,000 units. Marigold is currently making these components in its own factory. The following costs are associated with this part of the process when 100,000 units are produced:

Direct material	$22700
Direct labour	21900
Manufacturing overhead	29200
Total	$73800

The manufacturing overhead consists of $11900 of costs that will be eliminated if the components are no longer produced by Marigold. From Marigolds point of view, how much is the incremental cost or savings if the widgets are bought instead of made?

A	$13800 incremental savings

B	$3500 incremental cost

C	$3500 incremental savings

D	$13800 incremental cost