Answer the Following Questions Using the Information Below:
Rubium Micro

question 165

Multiple Choice

Answer the following questions using the information below:
Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows:
$\begin{array}{lr}\text { Direct materials } & \$ 45.00 \\\text { Direct labor } & 35.00 \\\text { Variable overhead } & 33.00 \\\text { Fixed overhead } & 30.00\\\text { Total }&\$143.00\end{array}$ Crayola Technologies Inc. has contacted Rubium with an offer to sell 5,000 of the subassemblies for $135.00 each. Rubium will eliminate $85,000 of fixed overhead if it accepts the proposal.
-Should Rubium make or buy the subassemblies? What is the difference between the two alternatives?

• A) Buy; savings = $85,000
• B) Buy; savings = $50,000
• C) Make; savings = $25,000
• D) Make; savings = $120,000

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