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

Multiple Choice

Bull Company manufactures a part for its production cycle. The costs per unit for 5,000 units of this part are as follows: $\begin{array}{ll}\text { Direct materials } & \$ 3 \\\text { Direct labor } & 5 \\\text { Variable factory overhead } & 4 \\\text { Fixed factory overhead } & \underline{2} \\\text { Total costs } & \underline{\$ 14} \\\end{array}$ The fixed factory overhead costs are unavoidable. Assume that Bull 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. Bull Company should:

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