Assume a company is considering buying 10,000 units of a component part rather than making them. A supplier has agreed to sell the company 10,000 units for a price of $40 per unit. The company's accounting system reports the following costs of making the part: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per Unit $18 12 2 8 4 $44 10,000 Units per Year $180,000 120,000 20,000 80,000 40,000 $440,000 One-half of the traceable fixed manufacturing overhead relates to supervisory salaries and the remainder relates to depreciation of equipment with no salvage value. If the company chooses to buy this component part from a supplier, then the supervisor who oversees its production would be discharged. If the company begins buying the part from a supplier, it can use freed up capacity to produce and sell 2,350 more units of another product that earns a contribution margin per unit of $200. What is the financial advantage (disadvantage) of buying 10.000 units from the supplier? One-half of the traceable fixed manufacturing overhead relates to supervisory salaries and the remainder relates to depreciation of equipment with no salvage value. If the company chooses to buy this component part from a supplier, then the supervisor who oversees its production would be discharged. If the company begins buying the part from a supplier, it can use freed up capacity to produce and sell 2,350 more units of another product that earns a contribution margin per unit of $7.00. What is the financial advantage (disadvantage) of buying 10,000 units from the supplier? Multiple Choice $160,000) $123,550) $13,550) O $32,390) Assume a company is considering using available space to make 10,000 units of a component part that it has been buying from a supplier for a price of $40.25 per unit. The company's accounting system estimates the following costs of making the part: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per Unit $19 12 2 8 4 $47 10,000 Units per Year $190,000 120,000 20,000 80,000 40,000 $450,000 One-half of the traceable fixed manufacturing overhead relates to a supervisor that would have to be hired to oversee production of the part. The remainder of the traceable fixed manufacturing overhead relates to depreciation of equipment that the company already owns. This equipment has 20,000 units of unused capacity, no resale value, and it does wear out through use. The allocated fixed manufacturing overhead relates to general overhead costs, such as the plant manager's salary, lighting, heating and cooling costs, and plant insurance costs. What is the financial advantage (disadvantage) of making 10,000 units instead of buying them from the supplier? One-half of the traceable fixed manufacturing overhead relates to a supervisor emainder of the traceable fixed manufacturing overhead relates to depreciati 20,000 units of unused capacity, no resale value, and it does wear out through overhead costs, such as the plant manager's salary, lighting, heating and cooli disadvantage) of making 10,000 units instead of buying them from the supplie Multiple Choice O $20,000 $32,500 $(20,000) $(32,500)
