Question
Howard can produce 100 units of a component part with the following costs: Direct Materials $22000 Direct Labor 6000 Variable Overhead 19500 Fixed Overhead 16000
Howard can produce 100 units of a component part with the following costs:
| Direct Materials | $22000 |
| Direct Labor | 6000 |
| Variable Overhead | 19500 |
| Fixed Overhead | 16000 |
If Howard can purchase the component part externally for $56000 and only $4000 of the fixed costs can be avoided, what is the correct make-or-buy decision?
Make and save $4500
Buy and save $3500
Make and save $3500
Buy and save $8500
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Accounting Principles Part 3
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow
6th Canadian edition Volume 1
978-1118306802
