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Bovee Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows: Direct materials
Bovee Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows: Direct materials Direct labour Variable factory overhead Fixed factory overhead Total costs $ 24 40 32 16 $112 The fixed factory overhead costs are unavoidable. Assume that Bovee can buy 10,000 units of the part from another producer for $120 each. The facilities currently used to make the part could be rented out to another manufacturer for $160,000 a year. Bovee should A. buy the part as that would save $4 per unit. B. make the part as that would save $24 per unit. C. make the part as that would save $8 per unit. D. buy the part as that would save $24 per unit.
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