Question 7 Suppose a BMW executive in Germany is trying to decide whether the company should continue to manufacture an engine component or purchase it from Frankfurt Corporation for 50 each. Demand for the coming year is expected to be the same as for the current year, 200,000 units. Data for the current year follow: If BMW makes the components, the unit costs of direct material will increase by 10%. If BMW buys the components, 30% of the fixed costs will be avoided. The other 70% will continue regardless of whether the components are manufactured or purchased. Assume that variable overhead varies with output volume. The company should: a) Buy, since the total cost of buying (10,000,000) is lower than the total cost of making (11,500,000) b) Buy, since the total cost of buying (9,400,000) is lower than the total cost of making (10,000,000 ) c) Make, since the total cost of making (9,400,000) is lower than the total cost of buying (10,000,000) d) Make, since the total cost of making (8,900,000) is lower than the total cost of buying (10,000,000)