Houston Corporation Manufacturers a Part for Its Production Cycle

Multiple Choice

Houston Corporation manufacturers a part for its production cycle. The costs per unit for 5,000 units of this part are as follows: Johnson Company has offered to sell Houston Corporation 5,000 units of the part for $112 per unit. If Houston Corporation accepts Johnson Company's offer, total fixed costs will be reduced to $60,000. What alternative is more desirable and by what amount is it more desirable?
Alternative Amount

A) Make $ 20,000
B) Make $120,000
C) Buy $ 40,000
D) Buy $100,000