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7. Epson is considering outsourcing cartridges to a Mexican manufacturer, which has offered to sell an unlimited quantity of cartridges for $5.25 per unit.
7. Epson is considering outsourcing cartridges to a Mexican manufacturer, which has offered to sell an unlimited quantity of cartridges for $5.25 per unit. If Epson accepts the offer, the facilities currently used to make cartridges could be rented to one of Epson's suppliers for $18,000 per year. In addition, the cost of making the component is $4.00 per unit, which includes $2.00 of fixed Ngoc costs, of which only $1.50 per unit can be avoided if the department is shut down. Epson currently produces about 1,000 units per month. What is the cost advantage or disadvantage of per unit of outsourcing the component? a. $0.5 disadvantage b. $1.50 disadvantage C. $0.25 disadvantage d. $0.25 advantage
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