Fornelli Inc.can produce 100 units of a component part with the following costs: $$\begin{array} { l r }
\text { Direct Materials } & \$ 15,000 \
\text { Direct Labor } & 6,500 \
\text { Variable Overhead } & 16,000 \
\text { Fixed Overhead } & 11,000
\end{array}$$ If Fornelli Inc.can purchase the component part externally for $44000 and only $4000 of the fixed costs can be avoided what is the correct make-or-buy decision?

Question

Fornelli Inc.can produce 100 units of a component part with the following costs: $$\begin{array} { l r } 
\text { Direct Materials } & \$ 15,000 \
\text { Direct Labor } & 6,500 \
\text { Variable Overhead } & 16,000 \
\text { Fixed Overhead } & 11,000
\end{array}$$ If Fornelli Inc.can purchase the component part externally for $44000 and only $4000 of the fixed costs can be avoided what is the correct make-or-buy decision?

Quizplus · Accepted Answer

The Answer of Fornelli Inc.can produce 100 units of a component part with the following costs: $$\begin{array} { l r } 
\text { Direct Materials } & \$ 15,000 \
\text { Direct Labor } & 6,500 \
\text { Variable Overhead } & 16,000 \
\text { Fixed Overhead } & 11,000
\end{array}$$ If Fornelli Inc.can purchase the component part externally for $44000 and only $4000 of the fixed costs can be avoided what is the correct make-or-buy decision?

Fornelli Inc If Fornelli Inc