Rowan Quinn Company Manufactures Kitchen Appliances

Multiple Choice

Rowan Quinn Company manufactures kitchen appliances. Currently, it is manufacturing one of its components at a variable cost of $40 and fixed costs of $15 per unit. An outside provider of this component has offered to sell Rowan Quinn the component for $45. Determine the best plan and calculate the savings assuming fixed costs are unaffected by the decision.

A) $5 savings per unit if manufactured
B) $5 savings per unit if purchased
C) $10 savings per unit if manufactured
D) $15 savings per unit if purchased