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Fornelli, Inc -If Fornelli, Inc

question 5

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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\begin{array} { l r } \text { Direct Materials } & \$ 15,000 \\\text { Direct Labor } & 6,500 \\\text { Variable Overhead } & 16,000 \\\text { Fixed Overhead } & 11,000\end{array}
-If Fornelli, Inc.can purchase the component part externally for $44,000 and only $4,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?

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