1. 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 $40.75 per unit. The companys accounting system reports the following costs of making the part:

Per Unit

Direct Materials $19

Direct Labor $12

Variable MOH $2

Fixed MOH $12

If the company chooses to buy this component part from a supplier, then $40,000 of the fixed overhead would be avoided. What is the financial advantage (disadvantage) of buying 10,000 units from the supplier?