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What is the correct make-or-buy decision

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Reference no: EM132527112

Swifty, Inc. can produce 100 units of a component part with the following costs:

Direct Materials                   $29500

Direct Labour                       14200

Variable Overhead                31400

Fixed Overhead                   21300

Question 1: If Swifty, Inc. can purchase the component externally for $88000 and only $7600 of the fixed costs can be avoided, what is the correct "make-or-buy decision"?

Option a) Make and save $800.

Option b) Buy and save $800.

Option c) Make and save $5300.

Option d) Buy and save $12900.

Reference no: EM132527112

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