Harrison Enterprises Currently Produces 8,000 Units of Part B13 If Harrison Decides to Buy Part B13, 50% of the Costs

Multiple Choice

Harrison Enterprises currently produces 8,000 units of part B13.Current unit costs for part B13 are as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 12 \\\text { Direct labor } & 9 \\\text { Factory rent } & 7 \\\text { Administrative costs } & 10 \\\text { General factory overhead (allocated) } & \underline { 7 } \\\text { Total } & \$ 45\end{array}$$ If Harrison decides to buy part B13, 50% of the administrative costs would be avoided.All of the company's items, including part B13, are manufactured in the same rented production facility.The company has an offer from a wholesaler that wishes to sell the part to Harrison for $31 per unit.What will occur if the company accepts the offer?

A) The cost for this part will increase by $5 per unit.
B) The cost for this part will be the same.
C) The cost for this part will decrease by $14 per unit.
D) The cost for this part will decrease by $10 per unit.