9 Motor Company manufactures 10,000 units of Part M-l each year for use in its production. The following total costs were reported last year: Direct materials $20,000.00 Direct labor $55,000.00...

Extracted text: 9 Motor Company manufactures 10,000 units of Part M-l each year for use in its production. The following total costs were reported last year: Direct materials $20,000.00 Direct labor $55,000.00 Variable manufacturing overhead $45,000.00 Fixed manufacturing overhead $70,000.00 Total manufacturing cost $190,000.00 Valve Company has offered to sell Motor 10,000 units of Part M-l for $16.50 per unit. If Motor accepts the offer, some of the facilities presently used to manufacture Part M-l could be rented to a third party at an annual rental of $15,000. Additionally, $4 per unit of the fixed overhead applied to Part M-l would be totally eliminated. Should Motor Company accept Valve Company's offer, and why? A. No, because it would be $5,000 cheaper to make the part. B. Yes, because it would be $10,000 cheaper to buy the part. C. No, because it would be $15,000 cheaper to make the part. D. Yes, because it would be $25,000 cheaper to buy the part. E. None of the above