Mighty Safe Fire Alarm is currently buying 57,000 motherboards from MotherBoard, Inc., at a price of $66 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $29 per unit; direct labor, $8 per unit; and variable factory overhead, $16 per unit. Fixed costs for the plant would increase by $87,000. Which option should be selected and why? a. make, $653,790 increase in profits b. make, $741,000 increase in profits c. buy, $653,790 increase in profits d. buy, $87,000 increase in profits

Mighty Safe Fire Alarm is currently buying 57,000 motherboards from MotherBoard, Inc., at a price of $66 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $29 per unit; direct labor, $8 per unit; and variable factory overhead, $16 per unit. Fixed costs for the plant would increase by $87,000. Which option should be selected and why? a. make, $653,790 increase in profits b. make, $741,000 increase in profits c. buy, $653,790 increase in profits d. buy, $87,000 increase in profits

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...

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