Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are...
Rubium Micro Devices currently manufactures a subassembly for
its main product. The costs per unit are as follows:
| Direct materials | $54.00 |
| Direct labor | 35.00 |
| Variable overhead | 40.00 |
| Fixed overhead | 34.00 |
| Total | $163.00 |
Crayola Technologies Inc. has contacted Rubium with an offer to
sell 6,000 of the subassemblies for $144.00 each. Rubium will
eliminate $89,000 of fixed overhead if it accepts the proposal.
Should Rubium make or buy the subassemblies? What is the difference
between the two alternatives?
|
Make; savings = $203,000 |
||
|
Make; savings = $1,000 |
||
|
Buy; savings = $7,000 |
||
|
Buy; savings = $89,000 |
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