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Tex's Manufacturing Company Can Make 100 Units of a Necessary

question 71

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Tex's Manufacturing Company can make 100 units of a necessary component part with the following costs:  Direct Materials $120,000 Direct Labor 25,000 Variable Overhead 45,000 Fixed Overhead 30,000\begin{array} { l r } \text { Direct Materials } & \$ 120,000 \\\text { Direct Labor } & 25,000 \\\text { Variable Overhead } & 45,000 \\\text { Fixed Overhead } & 30,000\end{array} If Tex's Manufacturing Company can purchase the component externally for $190,000 and only $5,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?


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