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

Multiple Choice

Lakers Company manufactures a part for its production cycle.The costs per unit for 5,000 units of this part are as follows: $\begin{array} {ll}\text {Direct materials}&\$3\\\text {Directlabor}&5\\\text {Variable factory overhead}&4\\\text {Fixed factory overhead}&2\\\text {Total costs}&\$14\\\end{array}$ The fixed factory overhead costs are unavoidable.Assume that Lakers Company has been offered 5,000 units of the part from another producer for $14 each.The facilities currently used could be used to make 5,000 units of a product that would contribute $5 a unit to fixed expenses.No additional fixed costs would be incurred.Lakers Company should _____.

A) make the new product and buy the part to earn an extra $3 per unit contribution to profit
B) make the new product and buy the part to earn an extra $1 per unit contribution to profit
C) continue to make the part to earn an extra $1 per unit contribution to profit
D) continue to make the part to earn an extra $3 per unit contribution to profit