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Bonita Industries, Inc. can produce 100 units of a component part with the following costs: Direct Materials $11000 Direct Labor 6000 Variable Overhead 18000 Fixed

Bonita Industries, Inc. can produce 100 units of a component part with the following costs:

Direct Materials $11000
Direct Labor 6000
Variable Overhead 18000
Fixed Overhead 12000

If Bonita Industries, Inc. can purchase the component part externally for $42000 and only $4000 of the fixed costs can be avoided, what is the correct make-or-buy decision?

Buy and save $1000

Make and save $3000

Make and save $1000

Buy and save $7000

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