Truckel, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows:
Direct materials and direct labor $11
Variable overhead 5
Fixed overhead 8
Total $24
Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $18 each. If Truckel makes the wickets, variable costs are $16 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Truckel make or buy the wickets?
a) Make; savings = $5,000
b) Make; savings = $10,000
c) Buy; savings = $15,000
d) Buy; savings = $5,000
d) Buy; savings = $5,000
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