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Moon Appliance manufactures a variety of appliances which all use Part B89. Currently, Moon Appliance manufactures Part B89 in its internal manufacturing process. Moon Appliance
Moon Appliance manufactures a variety of appliances which all use Part B89. Currently, Moon Appliance manufactures Part B89 in its internal manufacturing process. Moon Appliance produces 11,000 units of Part B89 annually. The annual costs to product Part B89 at the level of 11,000 units include:
$3.4 Direct materials S8.1 Direct labor S4.1 Variable manufacturing overhead S3.5 Fixed manufacturing overhead Total cost $19.1 All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier. Moon Appliance has no alternative use for its manufacturing facilities. Nadal Parts Company has offered t sell 11,000 units of Part B89 to Moon Appliance for $20.5 per unit. What should Moon Appliance do? O A. Make the part and save $4.8 per unit. O B. Make the part and save $12.9 per unit. O C. Make the part and save $9.5 per unit. O D. Buy from Nadal Parts Company and lose $1.4 per unitStep by Step Solution
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