Tex's Manufacturing Company Can Make 100 Units of a Necessary

Tex's Manufacturing Company can make 100 units of a necessary component part with the following costs: $$\begin{array} { l r } \text { Direct Materials } & \$ 120,000 \\\text { Direct Labor } & 25,000 \\\text { Variable Overhead } & 45,000 \\\text { Fixed Overhead } & 30,000\end{array}$$ If Tex's Manufacturing Company can purchase the component externally for $190,000 and only $5,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?

A) Buy and save $5,000
B) Make and save $5,000
C) Make and save $15,000
D) Buy and save $15,000

Correct Answer:

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