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A&L, Inc. manufactures ceiling fans. The company currently manufactures various sizes of fan blades. The company is operating at 85% capacity. The manufacturing costs for

A&L, Inc. manufactures ceiling fans. The company currently manufactures various sizes of fan blades. The company is operating at 85% capacity. The manufacturing costs for large blades is $85 per unit, which includes fixed costs of $35 and variable costs of $50. A proposal from an outside source to buy large blades for $60 per unit plus a $6 per unit freight cost. The company produces 2,000 large fan blades a year. Should A&L, Inc. make or buy the large fan blades and if so, what would the differential savings per unit be by making the correct decision?

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Make, $16.00 per unit savings

Buy, $31.00 per unit savings

Buy, $16.00 per unit savings

Make, $31.00 per unit savings

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