dlicint the old machine Tavor of keeping the old machine 7 R

dlicint the old machine Tavor of keeping the old machine 7) Rubium Micro Devices costs per unit are as follows: es currently manufactures a subassembly for its main produet.The Direct materials Direet labor Variable overhead Fixed overhead $54.00 35.00 40.00 34.00 S163.00 Total lies for S144.00 each. Rubium will eliminate $89,000 of fixed overhead i it ould Rubium make or buy the subassemblies? What is the rayola echnologies Inc. has contacted Rubium with an offer to sell 6,000 of the accepts the proposal. Sh difference between the two alternatives? A) Buy; savings $89,000 B) Buy; savings- $7,000 D) Make; savings -$203,000

Solution

C) Make; savings = $1,000

Cost to buy = 6,000 × $144.00 = $864,000

Cost to make = [($54.00 + $35.00 + $40.00) × 6,000 + $89,000] = $863,000

Cost savings = $864,000 - $863,000 = $1,000; make the subassemblies