Plainfield Company manufactures part G for use in its production cycle. The full cost per unit for each of 10,000 units of part G manufactured per year by Plainfield are as follows:

Direct materials	$ 2
Direct labor	22
Variable overhead	5
Fixed overhead	14
	$ 43

Verona Company has offered to sell Plainfield 10,000 units of part G for $40 per unit. If Plainfield accepts Verona's offer, the released facilities could be used to save $54,000 in relevant costs in the manufacture of part H. In addition, $11 per unit of the fixed overhead applied to part G would be eliminated. Based solely on a short-term financial analysis, which alternative is more desirable and by what amount?

	Alternative	Amount
A)	Manufacture	$ 10,000
B)	Manufacture	$ 34,000
C)	Buy	$ 54,000
D)	Buy	$ 84,000
E)	Buy	$ 10,000

Multiple Choice

• Option A

• Option B

• Option C

• Option D

• Option E