Fornelli, Inc. can produce 100 units of a component part with the following costs: Direct Materials $15,000
Direct Labor
6,500
Variable Overhead
16,000
Fixed Overhead
11,000
f Fornelli, Inc. can purchase the component part externally for $44,000 and only $6,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?
Select one:
a. Buy and save $6,500
b. Make and save $500
c. Make and save $2,500
d. buy and save $2,500
e. Buy and save $500