Question $21$

Frederick Company is thinking about having one of its products manufactured by an outsic would cost $$12\mathrm{.}40$ per unit for direct materials and $$9\mathrm{.}40$ per unit for direct labor. Factory incremental overhead to make this product is $$7\mathrm{.}60$ per unit. If Frederick Company can buy the company should:

Make the product because current factory overthead is less than $$130,000.$

Make the product because factory overhead is a sunk cost.

$$ Buy the product because the total incremental costs of manufacturing are greater than $$130,000.$