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Assu,me a company is considering buying 10.000 units of a component part rather than making them. A supprler has agreed to sell the company
Assu,me a company is considering buying 10.000 units of a component part rather than making them. A supprler has agreed to sell the company 10.000 units for a price of S40 l,e Units per Year 12e,eo 2e,ae 8e,eo 4e,o C) 3s000J Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost S 18 S 44 S 18e, S 44e,eae One-half of the traceable fixed manufacturing uerhead relates to supervisory salaries amd the remainder relates to depreciation of equipment with no salvage value. Ifthe company chooses to buy tf-is component par from a supplier, then the supervisor who oversees its production would be discharged. the company begins buying the part from a supplier. it can use freed up capacity to produce and sell S.OOO more units of another product that earns a contribution margin per unit of $15.00. What is the financial advantage (disadvantage) of buying 10.000 units from the supplier? Multiple Cholce
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