Car Parts Company manufactures a part for use in its production of automobiles. The costs per unit ...

Car Parts Company manufactures a part for use in its production of automobiles. The costs per unit when 10,000 items are produced are:

   Direct materials   $6
   Direct manufacturing labour   30
   Variable manufacturing overhead   12
   Fixed manufacturing overhead   16
   Total   $64

Auto Company has offered to sell to Car Parts Company 10,000 units of the part for $60. The plant facilities could be used to manufacture another part at a savings of $90,000 if Car Parts accepts the offer. In addition, $10 per unit of fixed manufacturing overhead on the original part would be eliminated.

Required:
a.   What is the relevant per unit cost for the original part?
b.   Which alternative is best for Car Parts Company? By how much?