During 2026, it costs Westa, Inc. $18 per unit to produce part T5. During 2027, the unit cost has increased to $21 per unit. In 2027, Southside Company has offered to provide Part T5 for $16 per unit to Westa. None of the fixed manufacturing overhead costs are avoidable. Which of the following statements is true with regard to this make-or-buy decision?
Question 12 options:
1)
Differential costs are $5 per unit.
2)
Incremental costs are $2 per unit.
3)
Net relevant costs are $2 per unit.
4)
Incremental revenues are $3 per unit.