(Solved) Cruise Company produces a part that is used in the manufacture of one of its products. The unit manu

Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 6,000 units, are as follows:

Direct materials   $4.00
Direct labor   $4.00
Variable manufacturing overhead   $3.00
Fixed manufacturing overhead   $1.00
Total cost   $12.00
The fixed overhead costs are unavoidable.

Assume Cruise Company can purchase 6,000 units of the part from Suri Company for $14.00 each, and the facilities currently used to make the part could be used to manufacture 6,000 units of another product that would have an $8 per unit contribution margin. If no additional fixed costs would be incurred, what should Cruise Company do?
A) Make the new product and buy the part to earn an extra $5.00 per unit contribution to profit.
B) Make the new product and buy the part to earn an extra $6.00 per unit contribution to profit.
C) Continue to make the part to earn an extra $4.00 per unit contribution to profit.
D) Continue to make the part to earn an extra $2.00 per unit contribution to profit.

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Cruise Company produces a part that is used in the manufacture of one of its products. The unit manu

Managerial Accounting

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