Mighty Safe Fire Alarm Is Currently Buying 50,000 Motherboards from MotherBoard,Inc.at

question 171

Multiple Choice

Mighty Safe Fire Alarm is currently buying 50,000 motherboards from MotherBoard,Inc.at a price of $65 per board.Mighty Safe is considering making its own boards.The costs to make the board are as follows: direct materials,$32 per unit; direct labor,$10 per unit; and variable factory overhead,$16.00 per unit.Fixed costs for the plant would increase by $75,000.Which option should be selected and why?

• A) buy,$75,000 more in profits
• B) make,$275,000 increase in profits
• C) buy,$275,000 more in profits
• D) make,$350,000 increase in profits

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Definitions:

Large Organizational Groupings

Refers to the classification or arrangement of large entities, such as corporations or institutions, into groups or categories based on shared characteristics or purposes.

Hierarchy of Needs

A psychological theory proposed by Abraham Maslow outlining a five-tier model of human needs, from basic physiological needs to self-actualization.

Short-term Tasks

Activities or projects that are designed to be completed in a relatively short period of time.

Spoken Messages

Information or ideas conveyed through verbal communication, either in person or through media such as telephone or video conferencing.