Tchaikovsky Manufacturing Company can make 100 units of a necessary component part with the following costs. Direct Materials Direct Labor $80,000 13,000 Variable Manufacturing Overhead 40,000 Fixed Manufacturing Overhead 27,000 If Tchaikovsky Manufacturing Company can purchase the component externally for $145,000 and only $4,000 of the fixed costs can be avoided, what is the correct "make or buy" decision? a. Make and save $20,000. b. Buy and save $20,000. c. Buy and save $8,000. d. Make and save $8,000.
Tchaikovsky Manufacturing Company can make 100 units of a necessary component part with the following costs. Direct Materials Direct Labor $80,000 13,000 Variable Manufacturing Overhead 40,000 Fixed Manufacturing Overhead 27,000 If Tchaikovsky Manufacturing Company can purchase the component externally for $145,000 and only $4,000 of the fixed costs can be avoided, what is the correct "make or buy" decision? a. Make and save $20,000. b. Buy and save $20,000. c. Buy and save $8,000. d. Make and save $8,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Tchaikovsky Manufacturing Company can make 100 units of a necessary component part with the following costs.
Direct Materials
Direct Labor
$80,000
13,000
Variable Manufacturing Overhead 40,000
Fixed Manufacturing Overhead 27,000
If Tchaikovsky Manufacturing Company can purchase the component externally for $145,000 and only $4,000 of the fixed costs can be
avoided, what is the correct "make or buy" decision?
a. Make and save $20,000.
b. Buy and save $20,000.
c. Buy and save $8,000.
d. Make and save $8,000.
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