Question: Our standard costing for making component #456 (per unit) is: DM - var $3 DL - var $4 MOH - var $9 MOH fixed $20

Our standard costing for making component #456 (per unit) is:

DM - var $3

DL - var $4

MOH - var $9

MOH fixed $20 (all factory rent and utilities)

TOTAL $36

We have found a supplier who can get them for us (same quality) at $30. We can't use that part of the factory for anything else. Should we switch to buying rather than making?

a. Yes, buying will save us $6 per unit

b. Yes, buying will save us $36 per unit

c. No, buying will lose us $6 per unit

d. No buying will lose us $14 per unit

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