0 Required information [The following information applies to the questions displayed below. ] A company produces two products. Product1 sells for $155 and Product 2 sells for $115. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Product 1 PrOEUCt Direct materials 35 24 $ 12 Direct labor 23 26 Variable manufacturing overhead 22 12 Traceable fixed manufacturing overhead 23 25 Variable selling expenses 19 15 Common fixed expenses 22 17 Total cost per unit $133 $167 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. Consider each ofthe following questions separately. 5. The company expects to produce and sell 87,000 units of Product1 during the current year. A supplier has offered to manufacture and deliver 87,000 units for a price of $108 per unit. What is the financial advantage (disadvantage) of buying 87,000 Product1 units from the supplier instead of making those units? :Zl