Question
Mighty Safe Fire Alarm is currently buying 59,000 motherboards from MotherBoard, Inc., at a price of $65 per board. Mighty Safe is considering making
Mighty Safe Fire Alarm is currently buying 59,000 motherboards from MotherBoard, Inc., at a price of $65 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $28 per unit; direct labor, $9 per unit; and variable factory overhead, $14 per unit. Fixed costs for the plant would increase by $80,000. Which option should be selected and why? Oa. make, $745,760 increase in profits Ob. make, $826,000 increase in profits Oc. buy, $745,760 increase in profits Od. buy, $80,000 increase in profits
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