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QUESTION 10

1.Neely Manufacturing Company can make 100 units of a necessary component part with the followingcosts:

Direct Materials$120,000

Direct Labor25,000

Variable Overhead45,000

Fixed Overhead30,000

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