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Sutton Inc If Sutton Inc

question 78

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Sutton Inc. can produce 100 units of a component part with the following costs:  Direct Materials $130,000 Direct Labor 103,000 Variable Overhead 82,000 Fixed Overhead 62,000\begin{array} { l r } \text { Direct Materials } & \$ 130,000 \\\text { Direct Labor } & 103,000 \\\text { Variable Overhead } & 82,000 \\\text { Fixed Overhead } & 62,000\end{array} If Sutton Inc. can purchase the component part externally for $345000 and only $28000 of the fixed costs can be avoided what is the correct make-or-buy decision?

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