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Pett Company Produces a Part That Is Used in the Manufacture

Question 24

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Pett Company produces a part that is used in the manufacture of one of its products. The costs associated with the production of 5,000 units of this part are as follows:
Pett Company produces a part that is used in the manufacture of one of its products. The costs associated with the production of 5,000 units of this part are as follows:    Of the fixed factory overhead costs, $15,000 is avoidable. -Titus Company has offered to sell 5,000 units of the same part to Pett for $18 per unit. Assuming there is no other use for the facilities, Pett should A)  make the part as this would save $3 per unit. B)  buy the part as this would save $3 per unit. C)  buy the part as this would save the company $15,000. D)  make the part as this would save $1 per unit. Of the fixed factory overhead costs, $15,000 is avoidable.
-Titus Company has offered to sell 5,000 units of the same part to Pett for $18 per unit. Assuming there is no other use for the facilities, Pett should


A) make the part as this would save $3 per unit.
B) buy the part as this would save $3 per unit.
C) buy the part as this would save the company $15,000.
D) make the part as this would save $1 per unit.

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