Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials $ 45.00 Direct labor 35.00 Variable overhead 33.00 Fixed overhead 20.00 Total $133.00

Crayola Technologies Inc. has contacted Rubium with an offer to sell 5,000 of the subassemblies for $135.00 each. Rubium will eliminate $65,000 of fixed overhead if it accepts the proposal.

Should Rubium make or buy the subassemblies? What is the difference between the two alternatives?

a. Buy; savings = $70,000 b. Make; savings = $140,000 c. Buy; savings = $105,000 d. Make; savings = $45,000