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
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?
a) Make and save $15,000
b) Buy and save $15,000
c) Buy and save $5,000
d) Make and save $5,000
c) Buy and save $5,000
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