QUESTION 27

Bells Shop can make 1,000 units of a necessary component with the following costs:

Direct Materials $24,000

Direct Labor 6,000

Variable Overhead 3,000

Fixed Overhead ?

The company can purchase the 1,000 units externally for $39,000. The unavoidable fixed costs are $2,000 if the units are purchased externally. An analysis shows that at this external price, the company is indifferent between making or buying the part. What are the fixed overhead costs of making the component?

$6,000

$8,000

$4,000

Cannot be determined.