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Mighty Safe Fire Alarm is currently buying 60,000 motherboards from MotherBoard, Inc. at a price of $64 per board. Mighty Safe is considering making its

Mighty Safe Fire Alarm is currently buying 60,000 motherboards from MotherBoard, Inc. at a price of $64 per board. Mighty Safe is considering making its own motherboards. The costs to make the motherboards are as follows: direct materials, $30 per unit; direct labor, $11 per unit; and variable factory overhead, $15 per unit. Fixed costs for the plant would increase by $85,000.

Which option should be selected and why?

a.make, $394,800 increase in profits

b.buy, $394,800 more in profits

c.make, $480,000 increase in profits

d.buy, $85,000 more in profits

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