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Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials Direct labor Variable overhead Fixed overhead Total costs $50 35 36 40 $161 Crayola Technologies Inc. has contacted Rubium with an offer to sell 10,000 of the subassemblies for $139 each. Rubium will eliminate $93,000 of fixed overhead if it accepts the proposal. Should Rubium make or buy the subassemblies? What is the difference between the two alternatives? A. Make; savings = $87,000 B. Buy; savings = $93,000 C. Buy; savings = $37,000 D. Make; savings = $313,000

Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials Direct labor Variable overhead Fixed overhead Total costs $50 35 36 40 $161 Crayola Technologies Inc. has contacted Rubium with an offer to sell 10,000 of the subassemblies for $139 each. Rubium will eliminate $93,000 of fixed overhead if it accepts the proposal. Should Rubium make or buy the subassemblies? What is the difference between the two alternatives? A. Make; savings = $87,000 B. Buy; savings = $93,000 C. Buy; savings = $37,000 D. Make; savings = $313,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials Direct labor Variable overhead Fixed overhead Total costs $50 35 36 40 $161 Crayola Technologies Inc. has contacted Rubium with an offer to sell 10,000 of the subassemblies for $139 each. Rubium will eliminate $93,000 of fixed overhead if it accepts the proposal. Should Rubium make or buy the subassemblies? What is the difference between the two alternatives? A. Make; savings = $87,000 B. Buy; savings = $93,000 C. Buy; savings = $37,000 D. Make; savings = $313,000
Transcribed Image Text:Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials Direct labor Variable overhead Fixed overhead Total costs $50 35 36 40 $161 Crayola Technologies Inc. has contacted Rubium with an offer to sell 10,000 of the subassemblies for $139 each. Rubium will eliminate $93,000 of fixed overhead if it accepts the proposal. Should Rubium make or buy the subassemblies? What is the difference between the two alternatives? A. Make; savings = $87,000 B. Buy; savings = $93,000 C. Buy; savings = $37,000 D. Make; savings = $313,000
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