Growe Company Manufactures Sewing Machines and Requires 30,000 Units of a Component

Growe Company manufactures sewing machines and requires 30,000 units of a component that is used in the manufacturing process. If Growe buys the part from Zigler Brothers, the plant will be idle. Of the fixed, 55% overhead will continue regardless of the decision. The cost to buy the part from Zigler is $46. The unit cost to make the part is: Which alternative is more profitable and by what amount?

A) Buy, $150,000
B) Make,$150,000
C) Buy, $75,000
D) Make, $75,000

Correct Answer:

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