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Mighty Safe Fire Alarm is currently buying 58,000 motherboards from MotherBoard, Inc., at a price of $63 per board. Mighty Safe is considering making its
Mighty Safe Fire Alarm is currently buying 58,000 motherboards from MotherBoard, Inc., at a price of $63 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $31 per unit; direct labor, $9 per unit; and variable factory overhead, $17 per unit. Fixed costs for the plant would increase by $75,000. Which option should be selected and why?
a.make, $348,000 increase in profits
b.buy, $75,000 increase in profits
c.buy, $273,180 increase in profits
d.make, $273,180 increase in profits
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