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37 Flavor Company incurs unit costs of $24 ($18 variable and $6 fixed) in making an assembly part for its finished product. A supplier offers

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37

Flavor Company incurs unit costs of $24 (\$18 variable and \$6 fixed) in making an assembly part for its finished product. A supplier offers to make 20,000 units of the assembly part at $17 per unit. If the offer is accepted, Flavor will save all variable costs but no fixed costs. The total cost saving Flavor will realize by buying the part is A) $20,000 B) $140,000 C) $220,000 D) $360,000 E) none of the above

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