Quikcook Microwave Co manufactures doors used for its microwave ovens. Annual cost to manufacture 40,000...
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Quikcook Microwave Co manufactures doors used for its microwave ovens. Annual cost to manufacture 40,000 doors each year is as follows:
| DM | 200,000 |
| DL | 40,000 |
| Var. OH | 80,000 |
| Fixed OH | 320,000 |
| Total | 640,000 |
Delilah Glass Corp offers to provide Quikcook with all annual door needs for $14 per door. If accepted, Quikcook eliminates 40% of fixed OH, and has no alternative use for the idle facilities. Would Quikcook be better off to make or buy the doors and by how much:
a. 48,000 better to buy
b. 48,000 better to make
c. 112,000 better to buy
d. 112,000 better to make
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