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Mighty Safe Fire Alarm is currently buying 60,000 motherboards from MotherBoard, Inc., at a price...

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Accounting

Mighty Safe Fire Alarm is currently buying 60,000 motherboards from MotherBoard, Inc., at a price of $68 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $34 per unit; direct labor, $11 per unit; and variable factory overhead, $15 per unit. Fixed costs for the plant would increase by $83,000. Which option should be selected and why?

a. buy, $397,200 increase in profits

b. make, $480,000 increase in profits

c. buy, $83,000 increase in profits

d. make, $397,200 increase in profits

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