Question: Assume that Water Source Inc. has been purchasing a component necessary for its final product for $360 a unit. The factory is currently operating at

Assume that Water Source Inc. has been purchasing a component necessary for its final product for $360 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 $ 78 Direct labor 86 Variable factory overhead 54 Fixed factory overhead 56 Total cost per unit $218 Calculate the cost savings from manufacturing the component internally. a. $142 b. $196 c. $228 d. $220

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