Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows:

Direct material $54.00

Direct labor $35.00

Variable overhead $40.00

Fixed overhead $34.00

Total$163.00

Crayola Technologies Inc. has contacted Rubium with an offer to sell 6,000 of the subassemblies for $144.00 each. Rubium will eliminate $89,000 of fixed overhead if it accepts the proposal. Should Rubium make or buy the subassemblies? What is the difference between the two alternatives?

1. a.Make; savings = $203,000
2. b.Make; savings = $1,000
3. c.Buy; savings = $7,000
4. d.Buy; savings = $89,000