Mighty Safe Fire Alarm is currently buying 60,000 motherboards from MotherBoard, Inc. at a price of $67 per board. Mighty Safe is considering making its own motherboards. The costs to make the motherboards are as follows: direct materials, $30 per unit; direct labor, $12 per unit; and variable factory overhead, $17 per unit. Fixed costs for the plant would increase by $89,000. Which option should be selected and why? a. make, $391,200 increase in profits b. buy, $89,000 more in profits c. make, $480,000 increase in profits d. buy, $391,200 more in profits

Mighty Safe Fire Alarm is currently buying 60,000 motherboards from MotherBoard, Inc. at a price of $67 per board. Mighty Safe is considering making its own motherboards. The costs to make the motherboards are as follows: direct materials, $30 per unit; direct labor, $12 per unit; and variable factory overhead, $17 per unit. Fixed costs for the plant would increase by $89,000. Which option should be selected and why? a. make, $391,200 increase in profits b. buy, $89,000 more in profits c. make, $480,000 increase in profits d. buy, $391,200 more in profits

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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