Johnson Company Manufactures a Part for Its Production Cycle

Multiple Choice

Johnson Company manufactures a part for its production cycle.The annual costs per unit for 10,000 units of the part are as follows: The fixed factory overhead costs are unavoidable.Spalding Company has offered to sell 10,000 units of the same part to Johnson Company for $60 per unit.The facilities currently used to make the part could be rented out to another manufacturer for $100,000 per year.Johnson Company should ________.

A) make the part to save $1 per unit
B) make the part to save $2.50 per unit
C) buy the part to save $1 per unit
D) buy the part to save $2.50 per unit