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Georgian Monitors Ltd., a manufacturer of computer monitors, currently produces a 19-inch LCD monitor. The company's accounting department has reported the following annual costs of
Georgian Monitors Ltd., a manufacturer of computer monitors, currently produces a 19-inch LCD monitor. The company's accounting department has reported the following annual costs of producing the LCD monitor internally: Georgian Monitors Annual Production Costs for 19-inch LCD Monitor Per Unit 9,000 Units Direct Materials $27.00 $243,000 Direct Labor $11.00 $99,000 Variable Overhead $7.00 $63,000 Production Supervisor's Salary $14.00 $126,000 Depreciation of LCD manufacturing equipment $10.00 $90,000 Allocated Fixed Overhead $6.00 $54,000 Total Cost $75.00 $675,000 An external supplier has offered to provide Georgian Monitors 9,000 units of the same LCD monitor per year at a price of $45 each. Also consider the following information: The LCD manufacturing
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