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Bili Inc. manufactures computer chips. Currently the costs per unit are as follows: Direct materials $1.00 Direct labour $10.00 Variable overhead $5.00 Fixed overhead $
Bili Inc. manufactures computer chips. Currently the costs per unit are as follows: Direct materials $1.00 Direct labour $10.00 Variable overhead $5.00 Fixed overhead $ 8.00 Total $ 24.00 Chips Corp. has contacted Bili with an offer to sell 10,000 of the chips for $22 per chip. If Continental accepts the proposal, $50000 of fixed overhead will be eliminated. Should Bili make or buy the chips? What is the difference between the two alternatives? Select one: a. Make, savings = $60,000 O b. Buy, savings = $20,000 c. Buy, savings = $50,000 d. Make, savings = $10,000
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