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Evans Engineering s product component average unit cost is $ 2 6 , comprised of $ 1 0 in direct materials, $ 7 in direct

Evans Engineerings product component average unit cost is $26, comprised of $10 in direct materials, $7 in direct labor, and $9 in overhead, of which $1 is variable. Evans has received an offer from an outside supplier who could produce the component part for a unit price of $21. If Evans purchases the component from the outside supplier, they could eliminate 75% of fixed overhead. The per-unit impact of purchasing from the outside supplier is (show work):
a. $1 disadvantage
b. $5 advantage
c. $3 advantage
d. $4 disadvantage

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