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What is the correct make-or-buy decision

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Reference no: EM133042491

Problem - Neely Manufacturing Company can make 100 units of a necessary component part with the following costs:

Direct Materials $120,000

Direct Labor 25,000

Variable Overhead 45,000

Fixed Overhead 30,000

If Neely Manufacturing Company can purchase the component externally for $190,000 and only $5,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?

A. Make and save $5,000

B. Buy and save $5,000

C. Make and save $15,000

D. Buy and save $15,000

Reference no: EM133042491

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