Galley Industries Can Produce 100 Units of a Necessary Component

question 44

Multiple Choice

Galley Industries can produce 100 units of a necessary component part with the following costs: $\begin{array}{lr}\text { Direct Materials } & \$ 20,000 \\\text { Direct Labor } & 9,000 \\\text { Variable Overhead } & 21,000 \\\text { Fixed Overhead } & 8,000\end{array}$ 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

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