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Nelson Manufacturing Company can make 100 units of a necessary component part with the following costs: Direct Materials $120,000 Direct Labor 25,000 Variable Overhead 45,000
Nelson Manufacturing Company can make 100 units of a necessary component part with the following costs:
| Direct Materials | $120,000 |
| Direct Labor | 25,000 |
| Variable Overhead | 45,000 |
| Fixed Overhead | 20,000 |
If Nelson Manufacturing Company can purchase the component externally for $190,000 and only $5,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?
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