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Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a
Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 6,400 units, are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost The fixed overhead costs are unavoidable. $4.10 $4.50 $3.20 $1.10 $12.90 Assume Cruise Company can purchase 6,400 units of the part from Suri Company for $14.30 each, and the facilities currently used to make the part could be used to manufacture 6,400 units of another product that would have an $12.00 per unit contribution margin. If no additional fixed costs would be incurred, what should Cruise Company do? O A. Continue to make the part to earn an extra $0.90 per unit contribution to profit. O B. Make the new product and buy the part to earn an extra $9.50 per unit contribution to profit. OC. Make the new product and buy the part to earn an extra $2.30 per unit contribution to profit. OD. Continue to make the part to earn an extra $2.10 per unit contribution to profit
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