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

Multiple Choice

Tender Company manufactures a part for its production cycle. The costs per unit for 5,000 units of this part are as follows: $\begin{array}{ll}\text { Direct materials } & \$ 3 \\\text { Direct labor } & 5 \\\text { Variable factory overhead } & 4 \\\text { Fixed factory overhead } & \underline{2} \\\text { Total costs } & \$ 14\end{array}$ The fixed factory overhead costs are unavoidable. Assume that Tender Company has been offered 5,000 units of the part from another producer for $15 each. The facilities currently used to make the part could be rented out to another manufacturer for $20,000 a year. Tender Company should:

A) make the part to save $1 per unit
B) make the part to save $3 per unit
C) buy the part to save $3 per unit
D) buy the part to save $1 per unit