Galley Industries Can Produce 100 Units of a Necessary Component

Galley Industries can produce 100 units of a necessary component part with the following costs: $$\begin{array} { l r } \text { Direct Materials } & \$ 20,000 \\\text { Direct Labor } & 9,000 \\\text { Variable Overhead } & 21,000 \\\text { Fixed Overhead } & 8,000\end{array}$$ If Galley Industries purchases the component externally, $2,000 of the fixed costs can be avoided. Below what external price for the 100 units would Galley choose to buy instead of make?

A) $50,000
B) $56,000
C) $44,000
D) $52,000

Correct Answer:

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