Question
McMurphy Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 14,000
McMurphy Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 14,000 units of this part are as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total costs $85,000 130,000 55,000 138,000 $408,000 Of the fixed factory overhead costs, $59,000 is avoidable. Conners Company has offered to sell 14,000 units of the same part to McMurphy Corporation for $38 per unit. Assuming there is no other use for the facilities, Schmidt should (Round any intermediate calculations to the nearest dollar.) A. make the part, as this would save $17 per unit B. make the part, as this would save $14 per unit C. buy the part, as this would save the company $238,000 D. buy the part, as this would save $17 per unit
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