Pett Company Produces a Part That Is Used in the Manufacture

Multiple Choice

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.
-Assume that Pett can buy 5,000 units of the part from another producer for $21 each. The current facilities could be used to make 5,000 units of a product that has a contribution margin of $5 per unit. Fixed factory overhead costs to produce this new product would be exactly the same as for the currently produced part. Pett should

A) continue to make the part and earn an extra $10,000 in profit.
B) buy the part and produce the new product and earn an extra $1 per unit contribution to profit.
C) continue to make the part and earn an extra $2 per unit contribution to profit.
D) buy the part and produce the new product and earn an extra $5 per unit contribution to profit.