Mighty Safe Fire Alarm is currently buying 59,000 motherboards from MotherBoard, Inc., at a price of $68 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materia $32 per unit; direct labor, $10 per unit; and variable factory overhead, $17 per unit. Fixed costs for the plant would increase by $76,000. Which option should be selected and why? Oa. make, $454,890 increase in profits Ob. make, $531,000 increase in profits Oc. buy, $76,000 increase in profits Od. buy, $454,890 increase in profits .
Mighty Safe Fire Alarm is currently buying 59,000 motherboards from MotherBoard, Inc., at a price of $68 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materia $32 per unit; direct labor, $10 per unit; and variable factory overhead, $17 per unit. Fixed costs for the plant would increase by $76,000. Which option should be selected and why? Oa. make, $454,890 increase in profits Ob. make, $531,000 increase in profits Oc. buy, $76,000 increase in profits Od. buy, $454,890 increase in profits .
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Mighty Safe Fire Alarm is currently buying 59,000 motherboards from MotherBoard, Inc., at a price of $68 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials,
$32 per unit; direct labor, $10 per unit; and variable factory overhead, $17 per unit. Fixed costs for the plant would increase by $76,000. Which option should be selected and why?
Oa. make, $454,890 increase in profits
Ob. make, $531,000 increase in profits
Oc. buy, $76,000 increase in profits
Od. buy, $454,890 increase in profits
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