Sutton Inc. can produce 100 units of a component part with the following costs: $$\begin{array} { l r }
\text { Direct Materials } & \$ 130,000 \
\text { Direct Labor } & 103,000 \
\text { Variable Overhead } & 82,000 \
\text { Fixed Overhead } & 62,000
\end{array}$$ If Sutton Inc. can purchase the component part externally for $345000 and only $28000 of the fixed costs can be avoided what is the correct make-or-buy decision?
A) Make and save $99000
B) Buy and save $4000
C) Make and save $2000
D) Buy and save $32000

Question

Sutton Inc. can produce 100 units of a component part with the following costs: $$\begin{array} { l r } 
\text { Direct Materials } & \$ 130,000 \
\text { Direct Labor } & 103,000 \
\text { Variable Overhead } & 82,000 \
\text { Fixed Overhead } & 62,000
\end{array}$$ If Sutton Inc. can purchase the component part externally for $345000 and only $28000 of the fixed costs can be avoided what is the correct make-or-buy decision?
A) Make and save $99000
B) Buy and save $4000
C) Make and save $2000
D) Buy and save $32000

Quizplus · Accepted Answer

The Answer of Sutton Inc. can produce 100 units of a component part with the following costs: $$\begin{array} { l r } 
\text { Direct Materials } & \$ 130,000 \
\text { Direct Labor } & 103,000 \
\text { Variable Overhead } & 82,000 \
\text { Fixed Overhead } & 62,000
\end{array}$$ If Sutton Inc. can purchase the component part externally for $345000 and only $28000 of the fixed costs can be avoided what is the correct make-or-buy decision?
A) Make and save $99000
B) Buy and save $4000
C) Make and save $2000
D) Buy and save $32000

Sutton Inc If Sutton Inc