Question: Assume that Water Source Inc. has been purchasing a component necessary for its final product for $390 a unit. The factory is currently operating at

Assume that Water Source Inc. has been purchasing a component necessary for its final product for $390 a unit. The factory is currently operating at 80% capacity, and no major increase in production is expected in the near future. The cost per unit of manufacturing the component internally is estimated as follows: Direct materials $ 88 Direct labor 72 Variable factory overhead 54 Fixed factory overhead 56 Total cost per unit $214 Calculate the cost savings from manufacturing the component internally. a. $176 b. $248 c. $230 d. $264

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