Mighty Safe Fire Alarm Is Currently Buying 50,000 Motherboards from MotherBoard

Multiple Choice

Mighty Safe Fire Alarm is currently buying 50,000 motherboards from MotherBoard, Inc. at a price of $65.00 per board. Mighty Safe is considering making its own motherboards. The costs to make the motherboards are as follows: direct materials, $32.00 per unit; direct labor, $10.00 per unit; and variable factory overhead, $16.00 per unit. Fixed costs for the plant would increase by $75,000. Which option should be selected and why?

A) buy, $75,000 more in profits
B) make, $275,000 increase in profits
C) buy, $275,000 more in profits
D) make, $350,000 increase in profits