Galley Industries Can Produce 500 Units of a Necessary Component

question 68

Multiple Choice

Galley Industries can produce 500 units of a necessary component part with the following costs: $$\begin{array} { l c } \text { Direct Materials } & \$ 75,000 \\\text { Direct Labour } & 20,000 \\\text { Variable Overhead } & 60,000 \\\text { Fixed Overhead } & 10,000\end{array}$$ If Galley Industries purchases the component externally, $3,000 of the fixed costs can be avoided.Below what external price for the 500 units would Galley choose to buy instead of make?

• A)$95,000
• B)$165,000
• C)$155,000
• D)$158,000

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