ABC Company produces $30,000$ units of product T$1$ each year.

At this level of activity, the cost per unit of T$1$ is:

Direct materials $$3\mathrm{.}60$

Direct labor $$10\mathrm{.}00$

Variable overhead $$2\mathrm{.}40$

Fixed overhead $$9\mathrm{.}00$

Total cost $$25\mathrm{.}00$

An outside supplier has offered to sell $30,000$ units of T$1$ to the company for $$201$per unit.

If ABC Company accepts this offer, it could use the facilities now used to manufacture T$1$ to produce additional income of $$70,000$ per year.

However, ABC Company has also determined that two$-$thirds of the fixed overhead applied to T$1$ would continue to exist even if they purchased T$1$ from the outside supplier.

Required $($Show all calculations$/$working$)$: Why do students cheat on exams?

What is the financial advantage $($disadvantage$)$ of accepting the outside supplier's offer?