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Kay Alarm is currently buying 50,000 circuit boards from Circuit City, Inc., at a price of $65 per board. Kay Alarm is considering making its
Kay Alarm is currently buying 50,000 circuit boards from Circuit City, Inc., at a price of $65 per board. Kay Alarm is considering making its own boards. The costs to make the board are as follows: direct materials, $32 per unit; direct labor, $10 per unit; and variable factory overhead, $16 per unit. Fixed costs for the plant would increase by $75,000. Which option should be selected and why? A. buy, $75,000 increase in profits B. make, $350,000 increase in profits C. make, $275,000 increase in profits D. buy, $275,000 increase in profits
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