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5 Points Aldean Company makes 120,000 units per year of a part called U67 for use in one of its products. Data concerning the
5 Points Aldean Company makes 120,000 units per year of a part called U67 for use in one of its products. Data concerning the unit production costs of the U67 is as follow: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing cost per unit $0.20 0.3 0.13 0.24 $0.62 An outside supplier has offered to sell Aldean Company all of the U67 it requires. If Aldean Company decided to discontinue making the U67. 30% of the above fixed manufacturing overhead costs could be avoided. Required: E [1] Assume Aldean Company has no alternative use for facilities that are now being used to produce the U67 product. If the outsider offers to sell the U67 for 0.56 each, what would be the financial advantages (disadvantage) of buy 120,000 U67 from the outside supplier?
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