currently make all components for the furniture from their raw materials $($sheet

netal, paint, nuts & bolts, etc.$)$

Component $"$A$",$ of which you make $3,000$ units per month, costs you $$29\mathrm{.}00$ in

variable costs per unit and $$12\mathrm{.}00$ per unit in fixed costs, for a total cost of $$41$ per

unit based on the $3,000$ units per month and your latest accounting records.

A supplier has offered to sell you $3,000$ units per month of component $"$A$"$ for

$$32\mathrm{.}00$ per unit. Should you accept?

Cannot answer this question without further examination of what fixed costs

can be shed if the offer is accepted

No$,$ don't accept the offer. You cannot save the fixed costs even though your

variable costs will be eliminated.

Yes. You will save $$9($i$.$e$.41-32=9)$ per unit by accepting the offer from the

supplier