Figure 13-2. ColorPro uses part 87A in the production of color printers. Unit manufacturing costs for part 87A are:
ColorPro uses 100,000 units of 87A per year. Filbert Company has offered to sell ColorPro 100,000 units of 87A per year for $12. Fixed overhead is unavoidable.
-Refer to Figure 13-2. Should ColorPro make or buy the part?
A) Make the part because it will save $100,000 over buying it.
B) Buy the part because it will save $100,000 over making it.
C) Make the part because it will save $1,100,000 over buying it.
D) Buy the part because it will save 1,100,000 over making it.
E) Buy the part because it will save $300,000 over making it.

Question

Figure 13-2. ColorPro uses part 87A in the production of color printers. Unit manufacturing costs for part 87A are:
  ColorPro uses 100,000 units of 87A per year. Filbert Company has offered to sell ColorPro 100,000 units of 87A per year for $12. Fixed overhead is unavoidable.
-Refer to Figure 13-2. Should ColorPro make or buy the part?
A) Make the part because it will save $100,000 over buying it. 
B) Buy the part because it will save $100,000 over making it. 
C) Make the part because it will save $1,100,000 over buying it. 
D) Buy the part because it will save 1,100,000 over making it. 
E) Buy the part because it will save $300,000 over making it.

Quizplus · Accepted Answer

Making the part will save $100,000 over buying it.