Your company makes BBQ's from scratch - that is to say, you currently make all of the components for the BBQ's from their raw materials (sheet metal, paint, nuts & bolts, etc.) Component "A", of which you make 3,000 units per month, costs you $29.00 in variable costs per unit and $12.00 per unit in fixed costs, for a total cost of $41 per unit based on the 3,000 units per month and your latest accounting records. A supplier has offered to sell you 3,000 units per month of component "A" for $32.00 per unit. Should you accept? No, don't accept the offer. You cannot save the fixed costs even though your variable costs will be eliminated. Cannot answer this question without further examination of what fixed costs can be shed if the offer is accepted Yes. You will save $9 (i.e. 41-32 = 9) per unit by accepting the offer from the supplier