Lakers Company Manufactures a Part for Its Production Cycle

Multiple Choice

Lakers Company manufactures a part for its production cycle.The annual costs per unit for 5,000 units of the part are as follows: The fixed factory overhead costs are unavoidable.Spalding Company has offered to sell 5,000 units of the same part to Lakers Company for $14 per unit.The facilities currently used for the part could be used to make 5,000 units annually of a new product that would contribute $5 a unit to fixed expenses.No additional fixed costs would be incurred with the new product.Lakers Company should ________.

A) make the part to save $1 per unit
B) make the part to save $3 per unit
C) make the new product and buy the part to save $1 per unit
D) make the new product and buy the part to save $3 per unit