ABC Company produces a part that is used in the manufacture of one of its products. The annual costs associated with the

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ABC Company produces a part that is used in the manufacture of
one of its products. The annual costs associated with the
production of 5,000 units of this part are as follows:
Direct
materials
$100,000
Direct
labor
56,000
Variable factory
overhead
72,000
Fixed factory
overhead 168,000
Total
costs $396,000
Of the fixed factory overhead costs, $72,000
are avoidable. Another company has offered to
sell 5,000 units of the same part to ABC for $70.00 per unit. The
facilities currently used to make the part can be rented out to
another manufacturer for $72,000 per year. What should ABC Company
do?
Select one:
a. Make the part to save $50,000.
b. Buy the part and rent the facilities to save
$72,000.
c. Buy the part and rent the facilities to save
$22,000.
d. Make the part to save $22,000.