The Northern Company manufactures $2,400$ units per year. The full manufacturing costs per unit are as follows: The Northern Company manufactures $2,400$ units per year. The full manufacturing costs per unit are as follows:

The Southern Company has offered to sell Northern Company $2,400$ units for $$15$ per unit. If Northern Company accepts the offer, $$12,000$ of fixed overhead will be eliminated. Northern should:

Select one:

a$.$ Make the units; the savings is $$2,400$

b$.$ Buy the units; the savings is $$14,400$

c$.$ Buy the units; the savings is $$28,800$

d$.$ Make the units; the savings is $$14,400$

Direct materials $$2\mathrm{.}00$

Direct labor $8\mathrm{.}00$

Variable manufacturing overhead $6\mathrm{.}00$

Average fixed manufacturing overhead $6\mathrm{.}00$

Total $$22\mathrm{.}00$

The Southern Company has offered to sell Northern Company $2,400$ units for $$15$ per unit. If Northern Company accepts the offer, $$12,000$ of fixed overhead will be eliminated. Northern should:

Select one:

a$.$

Make the units; the savings is $$2,400$

b$.$

Buy the units; the savings is $$14,400$

c$.$

Buy the units; the savings is $$28,800$

d$.$

Make the units; the savings is $$14,400$