[Solved] Garcia Company Produces a Part That Is Used in the Manufacture

Question 66
Multiple Choice

Garcia Company produces a part that is used in the manufacture of one of its products.The costs associated with the production of 5,000 units of this part are as follows: img Of the fixed factory overhead costs, $72,000 is avoidable.Assume that Garcia Company can buy 5,000 units of the part from another producer for $105.60 each.The facilities currently used to make the part could be rented out to another manufacturer for $72,000 a year.Garcia Company should _____.

A)make the part to save $19.20 per unit
B)make the part to save the company $48,000
C)buy the part to save $14.40 per unit
D)buy the part to save the company $72,000

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