Birch Company Manufactures a Part for Its Production Cycle The Fixed Factory Overhead Costs Are Unavoidable

Multiple Choice

Birch Company manufactures a part for its production cycle.The costs per unit for 5,000 units of this part are as follows: $\begin{array} {ll}\text {Direct materials}&\$3\\\text {Directlabor}&5\\\text {Variable factory overhead}&4\\\text {Fixed factory overhead}&6\\\text {Total costs}&\$16\\\end{array}$ The fixed factory overhead costs are unavoidable.Spalding Corporation has offered to sell 5,000 units of the same part to Birch Company for $15 a unit.Assuming no other use for the facilities, Birch Company should _____.

A) buy from Scalding Corporation to save $1 per unit
B) make the part to save $1 per unit
C) buy from Scalding Corporation to save $3 per unit
D) make the part to save $3 per unit