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What minimum external price for units would vaughn choose

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Reference no: EM132956612

Vaughn Industries can produce 400 units of a necessary component part with the following costs:

Direct Materials $75700

Direct Labour 20100

Variable Overhead 60200

Fixed Overhead 9000

Problem 1: If Vaughn Industries purchases the component externally, $3000 of the fixed costs can be avoided. Below what minimum external price for the 400 units would Vaughn choose to buy instead of make?

options:

Option 1: $165000

Option 2: $159000

Option 3: $95800

Option 4: $156000

Reference no: EM132956612

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