Question
Mighty Safe Fire Alarm is currently buying 62,000 motherboards from MotherBoard, Inc., at a price of $66 per board. Mighty Safe is considering making
Mighty Safe Fire Alarm is currently buying 62,000 motherboards from MotherBoard, Inc., at a price of $66 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, $10 per unit; and variable factory overhead, $17 per unit. Fixed costs for the plant would increase by $77,000. Which option should be selected and why? Oa. huy, $77,000 increase in profits Ob. make, $496,000 increase in profits Oc. buy, $419,120 increase in profits Od. make, $419,120 increase in profits.
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