Company A has contacted company B with an offer to sell it 5,000 units of a part that company B needs to complete it's final product. Company A has offered to sell the part to company B for $18.00 per unit. If company B makes the part, variable costs are $11 per unit. Fixed costs are $12 per unit; however, $5 per unit is avoidable. Should company B make or buy the Part and what are the savings of this choice? a) Buy: savings - $25,000 b) Make: savings - $10,000 c) Buy: savings - $10,000 d) Make; savings- $20,000 e) Buy: savings - $15.000 stion 4 Which of the following statements is true? a) Fixed costs are never relevant costs. b) All fixed costs are relevant costs as they impact on overall unit costs. c) Only those variable costs that differ between alternatives are relevant costs. d) None of the above. e) All variable costs are relevant costs. Main Question y A company can sell all the units it can produce of either product A or product B but not both. Product A has a unit contribution margin of $45 and takes three machine hours to make and product B has a unit contribution margin of $32 and takes two machine hours to make. There are 1,300 machine hours available to manufacture a product. What should the company do? a) Make product A which creates $13 more profit per unit than product B does. b) Make product B which creates $1 more profit per constraint than product A does. d) Make product B because more units can be made and sold than product A. d) The same total profits exists regardless of which product is made. e) None of the above