$20$

McGraw Company uses $9,750$ units of Part $x$ each year as a component in the assembly of one of its products. The company is presently producing Part $x$ internally at a total cost of $$161,750,$ computed as follows:

Direct materials

Direct labor

Variable manufacturing overhead

Fixed manufacturing overhead

$10$

Saved

Help

Save & Exit

Submit

points

Total cost

$01$:$08$:$45$

An outside supplier has offered to provide Part $x$ at a price of $$19\mathrm{.}90$ per unit. If McGraw Company stops producing the part internally, one$-$third of the fixed manufacturing overhead would be eliminated. Assume that direct labor is a variable cost.

Required:

Prepare an analysis showing the annual financial,advantage or disadvantage of accepting the outside supplier's offer.

$\backslash$table$[[,,$Make$],[$Outside purchase,,$],[$Direct materials,,$],[$Direct labor,,$],[$Variable manufacturing overhead,,$],[$Fixed manufacturing overhead,,$],[$Total cost$,,]]$

Mc

Graw

Prev

$20$ of $24$

Next