Carter, Inc. can make 100 units of a necessary component part with the following costs: Direct Materials $120,000 Direct Labor 20,000 Variable Overhead 60,000 Fixed Overhead 40,000

Carter, Inc. can make 100 units of a necessary component part with the following costs: Direct Materials $120,000 Direct Labor 20,000 Variable Overhead 60,000 Fixed Overhead 40,000

Carter, Inc. can make 100 units of a necessary component part with the following costs:


Direct Materials $120,000
Direct Labor 20,000
Variable Overhead 60,000
Fixed Overhead 40,000

If Carter can purchase the component externally for $220,000 and only $10,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?


A.Make and save $30,000

B.Buy and save $30,000

C.Make and save $10,000

D.Buy and save $10,000