Houser Corporation Manufactures a Part for Its Production Cycle A)Make $20,000
B)Make $120,000
C)Buy $40,000
D)Buy $100,000

Multiple Choice

Houser Corporation manufactures a part for its production cycle.The costs per unit for 5,000 units of this part are as follows: Kingston Company has offered to sell Houser Corporation 5,000 units of the part for $112 per unit.If Houser Corporation accepts Kingston Company's offer,total fixed costs will be reduced to $60,000.Which alternative is more desirable,and by what amount is it more desirable?
Alternative Amount
$$\begin{array} { l r } \text { Direct materials } & \$ 32 \\\text { Direct labour } & 40 \\\text { Variable overhead } & 16 \\\text { Fixed overhead } & 32 \\\text { Total } & \$ 120\end{array}$$

A) Make $20,000
B) Make $120,000
C) Buy $40,000
D) Buy $100,000