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

Multiple Choice

Hoover Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows: $\begin{array}{ll}\text { Direct materials } & \$ 20 \\\text { Direct labor } & 15 \\\text { Variable factory overhead } & 16 \\\text { Fixed factory overhead } & \underline{10} \\\text { Total costs } & \$ 61\end{array}$ The fixed factory overhead costs are unavoidable. Madison Company has offered to sell 10,000 units of the same part to Hoover Company for $55 a unit. Assuming no other use for the facilities, Hoover Company should:

A) make the part to save $4 per unit
B) buy from Madison to save $6 per unit
C) buy from Madison to save $4 per unit
D) make the part to save $6 per unit