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Gordon Corporation produces 1,000 units of a part per year which are used in the assembly of one of its products. The total costs of
Gordon Corporation produces 1,000 units of a part per year which are used in the assembly of one of its products. The total costs of producing these parts is:
Variable manufacturing cost $ 15,000 Fixed manufacturing cost $ 12,000 Total manufacturing cost $ 27,000The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, $8,000 of the total fixed costs incurred in producing the part can be avoided. The annual financial advantage (disadvantage) for the company as a result of buying the part from the outside supplier would be:
Group of answer choices
($5,000)
$7,000
($1,000)
$3,000
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