Goldwater Company Manufactures a Part for Its Production Cycle

Multiple Choice

Goldwater 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.Olson Company has offered to sell 10,000 units of the same part to Goldwater Company for $60 per unit.The facilities currently used to make the part could be used to make 10,000 units per year of a new product that has a contribution margin of $20 per unit.No additional fixed costs would be incurred with the new product.Goldwater Company should ________.

A) make the part to save $10,000
B) make the part to save $90,000
C) make the new product and buy the part to save $90,000
D) make the new product and buy the part to save $110,000