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For all calculations, you must show all of your work to receive full credit 2. Make or Buy (1.5pts): Koyota, Corp. is an auto manufacturer
For all calculations, you must show all of your work to receive full credit 2. Make or Buy (1.5pts): Koyota, Corp. is an auto manufacturer that makes one product, electric vehicles (EVs). The firm also currently makes the key components of its EVs, lithium ion batteries. The company reports the following costs of producing the batteries, at an activity level of 25,000 batteries per month: Per Unit Direct materials $195.50 Direct labor $ 96.00 Variable overhead $ 82.25 Factory supervisor's salary $ 4.50 Depreciation of factory equipment $ 6.00 Other fixed factory overhead $ 13.20 An outside supplier, Panaphonics, has offered to make the batteries and sell them to the firm for $385.00 each. If this offer is accepted, the factory supervisor's salary and all of the variable costs (DM, DL, VarOH) can be avoided. The factory equipment used to make the batteries was purchased many years ago and has no salvage value or other use. However, 80% of the 'other fixed factory overhead' costs would be avoided each month if the outside supplier's offer were accepted. Calculate the monthly financial advantage (disadvantage) for the company if it were to buy the batteries from the outside supplier
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