Question
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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Managerial Accounting Tools for business decision making
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
6th Edition
978-0470477144, 1118096894, 9781118214657, 470477148, 111821465X, 978-1118096895
