Use the information below to answer the following question(s):

Spahr Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 5,000 units, are as follows:

Direct materials	$2.00
Direct labour	$4.00
Variable manufacturing overhead	4.00
Fixed manufacturing overhead	$2.00
Total cost	$12.00
The fixed overhead costs are unavoidable.

1. Erickson Company has offered to sell 5,000 units of the same part to Spahr Company for $11 per unit. Assuming the company has no other use for its facilities, what should Spahr Company do?
   1. Make the part and save $1 per unit.
   2. Make the part and save $3 per unit.
   3. Buy from Erickson and save $1 per unit.
   4. Make the part and save $5 per unit.

2. Assuming no other use for its facilities, what is the highest price per unit that Spahr Company should be willing to pay for the part?
   1. $10
   2. $8
   3. $12
   4. $6