The Cornell Milling Company manufactures an intermediate product identified as Z1. Variable manufacturing costs per...
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Accounting
The Cornell Milling Company manufactures an intermediate product identified as Z1. Variable manufacturing costs per unit of Z1 are as follows:
| Direct materials | $ 20 |
| Direct labor | $10 |
| Manufacturing overhead | $8 |
Ithaca Tools has offered to sell Cornell Milling 10,000 units of Z1 for $31 per unit. If Cornell Milling accepts the offer, $30,000 of fixed manufacturing overhead will be eliminated. Applying differential analysis to the situation, Cornell Milling should
Group of answer choices
buy Z1: the saving is $100,000
make Z1: the saving is $100,000
buy Z1: the saving is $70,000
make Z1: the saving is $120,000
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