Moon Appliance Manufactures a Variety of Appliances Which All Use

Multiple Choice

Moon Appliance manufactures a variety of appliances which all use Part B89. Currently, Moon Appliance manufactures Part B89 itself. It has been producing 9,000 units of Part B89 annually. The annual costs of producing Part B89 at the level of 9,000 units include: All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier. Moon Appliance has no alternative use for the manufacturing facilities. Nadal Parts Company has offered to sell 9,000 units of Part B89 to Moon Appliance for $20.00 per unit. What should Moon Appliance do?

A) Make the part and save $9 per unit.
B) Make the part and save $5 per unit.
C) Buy from Nadal Parts Company and lose $2 per unit.
D) Make the part and save $13 per unit.