Glover Company Produces a Part That Has the Following Costs $\$ 9$

Multiple Choice

Glover Company produces a part that has the following costs per unit:
Direct material                                $\$ 9$
Directlabor                                        4
Variable overhead                              2
$\text { Fixed overhead. }$                         $\underline{6}$
Total                                                $\underline{\$21}$


London Corporation can provide the part to Glover for $23 per unit.Glover Company has determined that 50 percent of its fixed overhead would continue if it purchased the part.However,if Glover no longer produces the part,it can rent that portion of the plant facilities for $70,000 per year.Glover Company currently produces 12,000 parts per year.Which alternative is preferable and by what margin?

A) Make-$24,000
B) Make-$60,000
C) Buy-$10,000
D) Buy-$46,000