Smith Co ,Maker of High-Quality Eyewear,incurs Fixed Costs of $18 and and Variable

Multiple Choice

Smith Co. ,maker of high-quality eyewear,incurs fixed costs of $18 and variable costs of $36 in making one unit of its matrix line of sunglasses.Smith Co.'s major supplier has offered to make all 100,000 matrix sunglasses for $44 each.If Smith accepts the offer of the supplier,Smith will save $4 per unit in fixed costs.Based on this information,should Smith Co.make or buy the sunglasses and how much will they save?

A) Smith Co.should buy the sunglasses in order to save $200,000.
B) Smith Co.should buy the sunglasses in order to save $500,000.
C) Smith Co.should make the sunglasses in order to save $400,000.
D) Smith Co.should make the sunglasses in order to save $300,000.
= 100,000 x ($44-36-4) = $400,000