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Supler Company produces a part used in the manufac...

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Supler Company produces a part used in the manufacture of one of its products. The unit product cost is $18, computed as follows: Direct materials $8 Direct labor 4 Variable manufacturing overhead 1 Fixed manufacturing overhead 5 Unit product cost $18 An outside supplier has offered to provide the annual requirement of 4,000 of the parts for only $14 each. It is estimated that 60 percent of the fixed overhead cost above could be eliminated if the parts are purchased from the outside supplier. Based on these data, the per-unit dollar advantage or disadvantage of purchasing from the outside supplier would be: A. $1 disadvantage B. $1 advantage C. $2 advantage D. $4 disadvantage

 

Paper#3099 | Written in 18-Jul-2015

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