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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 thispart, assuming a production

Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of thispart, assuming a production level of 6,300 units, are as follows:

Direct materials -- $ 4.00

Direct labor --$4.40

Variable manufacturing overhead -- $3.10

Fixed manufacturing overhead -- $1.10

Total cost -- $ 12.60

The fixed overhead costs are unavoidable.

Suri Company has offered to sell 6,300 units of the same part to Cruise Company for $14.00 per unit. Assuming the company has no other use for itsfacilities, what should Cruise Companydo?

A.

Make the part and save $2.50 per unit.

B.

Make the part and save $10.40 per unit.

C.

Buy from Suri and save $1.40 per unit.

D.

Make the part and save $6.00 per unit.

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