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Your company makes BBQ's from scratch - that is to say, you currently...

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Accounting

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 $28.00 in variable costs per unit and $12.00 per unit in fixed costs, for a total cost of $40 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 $31.00 per unit. Should you accept?
Question 37 options:
No, don't accept the offer. You cannot save the fixed costs even though your variable costs will be eliminated.
Yes. You will save $9(i.e.40-31=9) per unit by accepting the offer from the supplier
Cannot answer this question without further examination of what fixed costs can be shed if the offer is accepted

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