ortune Company can produce 100 units of a component part of its product with the following...

ortune Company can produce 100 units of a component part of its product with the following costs: Variable manufacturing costs: $37,500 Fixed overhead costs: $11,000 Fortune can purchase 100 units of this component part from an outside vendor for $44,000. In doing so, fixed costs of $6,000 can be avoided. What decision should Fortune make? Make and save $500. Buy and save $500. Make and save $2,500. Buy and save $6,500.

Expert Solution

Make and save $500

	Make	Buy	Net Income Increase (Decrease)
Variable manufacturing costs	37,500	-	(37,500)
Fixed overhead costs	6,000	-	(6,000)
Purchase price	-	44,000	44,000
Total annual cost	43,500	44,000	500

ekkarill92 answered 2 years ago

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