Mighty Safe Fire Alarm is currently buying 57,000 motherboardsfrom MotherBoard, Inc. at a price of $66 per board. Mighty Safe isconsidering making its own boards. The costs to make the board areas follows: direct materials, $31 per unit; direct labor, $11 perunit; and variable factory overhead, $15 per unit. Fixed costs forthe plant would increase by $80,000. Which option should beselected and why?
a.buy, $433,200 more in profits
b.make, $513,000 increase in profits
c.buy, $80,000 more in profits
d.make, $433,200 increase in profits
Expert Answer
An answer will be send to you shortly. . . . .