13.
Ashley Industries can make 1,000 units of a necessary component with the following
costs:
Direct Materials $144,000
Direct Labor 36,000
Variable Overhead 18,000
Fixed Overhead ?
The company can purchase the 1,000 units externally for $234,000. The avoidable
fixed costs are $12,000 if the units are purchased externally. An analysis shows that at
this external price, the company is indifferent between making or buying the part. What
are the fixed overhead costs of making the component?
a. $48,000
b. $36,000
c. $24,000
d. Cannot be determined.