Business, 17.03.2020 01:58 mrsclnantambu9794

Laskowski Company manufactures a part for its production cycle. The annual costs per unit for 5,000 units of the part are as follows:

Per Unit

Direct materials $3.00
Direct labor 5.00
Variable factory overhead 4.00
Fixed factory overhead 2.00
Total costs $14.00

The fixed factory overhead costs are unavoidable. Hendricks Company has offered to sell 5,000 units of the same part to Laskowski 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. Laskowski Company should .

A) make the part to save $5,000
B) make the part to save $15,000
C) make the new product and buy the part to save $5,000
D) make the new product and buy the part to save $15,000 (this is the correct answer, please explain why)

Answers: 1

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Laskowski Company manufactures a part for its production cycle. The annual costs per unit for 5,000...

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