Question
A drink company makes 2,000 units per year of a part it uses in the products it manufactures. Direct materials 40 Direct Labor 20 Fixed
A drink company makes 2,000 units per year of a part it uses in the products it manufactures.
Direct materials 40
Direct Labor 20
Fixed manufacturing overhead 50
Variable manufacturing overhead 2
On the fixed OH, $29.00 of the fixed manufacturing overhead cost would continue even if its from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.
An outside supplier has offered to sell the company the part it needs for $68 a unit.
What is the total annual advantage/disadvantage of buying the parts from different supplier?
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