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

Multiple Choice

Johnson Company manufactures a part for its production cycle.The costs per unit for 10,000 units of this part are as follows: $\begin{array}{lr}\text { Direct materials } & \$ 20 \\\text { Directlabor } & 15 \\\text { Variable factory overhead } & 16 \\\text { Fixed factory overhead } & 10 \\\text { Total costs } & \$ 61\end{array}$ The fixed factory overhead costs are unavoidable.Assume that Johnson Company can buy 10,000 units of the part from another producer for $60 each.The facilities currently used to make the part could be rented out to another manufacturer for $100,000 a year.Johnson Company should _____.

A) buy the part to save $2.50 per unit
B) buy the part to save $1 per unit
C) make the part to save $2.50 per unit
D) make the part to save $1 per unit