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.
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Now suppose that ColorPro discovers that other costs will increase by $7,000 per year if the component is purchased rather than made internally.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 $107,000 over buying it.
D) Buy the part because it will save $107,000 over making it.
E) Make the part because it will save $10,000 over buying it.

Question

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.
-
 
Now suppose that ColorPro discovers that other costs will increase by $7,000 per year if the component is purchased rather than made internally.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 $107,000 over buying it. 
D) Buy the part because it will save $107,000 over making it. 
E) Make the part because it will save $10,000 over buying it.

Quizplus · Accepted Answer

11ea8a4c_48ae_e3eb_a0e6_b7cdbc7a95a7_TB5550_00 It is cheaper by $107,000 to make the part in-house.

ColorPro Uses Part 87A in the Production of Color Printers