Figure 13-2

Multiple Choice

Figure 13-2. ColorPro uses part 87A in the production of color printers.Unit manufacturing costs for part 87A are:
ColorPro uses 100,000 units of 87A per year.Filbert Company has offered to sell ColorPro 100,000 units of 87A per year for $12.Fixed overhead is unavoidable.
Refer to Figure 13-2.Now suppose that ColorPro discovers that other costs will increase by $7,000 per year if the component is purchased rather than made internally.Should ColorPro make or buy the part?

A) Make the part because it will save $100,000 over buying it
B) Buy the part because it will save $100,000 over making it
C) Make the part because it will save $107,000 over buying it
D) Buy the part because it will save $107,000 over making it
E) Make the part because it will save $10,000 over buying it