During 2015, it cost Westa, Inc.$12 per unit to produce Part T5.During 2016, it has increased to $14 per unit.In 2016, Southside Company has offered to provide Part T5 for $9 per unit to Westa.As it pertains to the make or buy decision, which statement is true?
A)Differential costs are $5 per unit.
B)Incremental costs are $3 per unit.
C)Net relevant costs are $3 per unit.
D)Incremental revenues are $2 per unit.

Question

Quizplus · Accepted Answer

The differential cost is the difference between the cost to make the part in-house ($14) and the cost to buy it from Southside Company ($9), which is $5 per unit.

During 2015, It Cost Westa, Inc