Question
24. MB Industries manufactures 15,000 components per year. Their manufacturing costs are: Direct materials $150,000 Direct labor $240,000 Variable overhead $90,000 Fixed overhead $120,000 There
24. MB Industries manufactures 15,000 components per year. Their manufacturing costs are:
Direct materials $150,000
Direct labor $240,000
Variable overhead $90,000
Fixed overhead $120,000
There are no alternative uses for the facilities used in making the components. An outside supplier is offering to sell the component to MB for $34 per unit. Should MB make or buy the component?
a. | Make, because otherwise (if it buys), income would decrease by $30,000 | c. | Buy, because otherwise (if it makes), income would decrease by $30,000 |
b. | Make, because otherwise (if it buys), income would increase by $30,000 | d. | Buy, because otherwise (if it makes), income would increase by $30,000 |
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