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An outside supplier has offered to make the part and sell it to the company for $35.00 each. If this offer is accepted, the supervisor's
An outside supplier has offered to make the part and sell it to the company for $35.00 each. If this offer is accepted, the supervisor's salary can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer was accepted, $3,700 of these allocated general overhead costs would unavoidable. In addition, the space used to produce part M15 could be used to make more of one of the company's other products, generating an additional segment margin of $14,200 per year for that product. Required: a. What is the financial advantage (disadvantage) of accepting the outside supplier's offer? Would Golden Company he financially hetter off to continue making nart M15 or to her it from Click Save and Submit to save and submit. Click Save All Answers to save all answers Save and Submit JOVE PRES Golden Company uses part M15 in one of its products. The company's Accounting Departme reports the following costs of producing the 3,250 units of the part that are needed every year. Per Unit Direct materials $7.75 Direct labor $6.20 Variable overhead $9.00 Supervisor's salary $5.20 Depreciation of special equipment $3.50 Allocated general overhead $1.90 Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers Save and Submit
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