Lakeside Inc. produces a product that currently sells for $108.00 per unit. Current production costs per unit include direct materials, $30; direct labor, $32; variable overhead, $15.00; and fixed overhead, $15.00. Product engineering has determined that a certain part of the product conversion process could be outsourced. Raw material costs would not be affected, but direct labor and variable overhead costs would be reduced by 30%. No other opportunity is currently feasible for unused production capacity. Required: a. What would be the net cost advantage or disadvantage if Lakeview decided to outsource part of the conversion process at a cost of $12.00 per unit? (Round your final answer to 2 decimal places.) Net cost: advantage or disadvantage, amount of that net cost advantage or disadvantage

b. Should Lakeside outsource part of the conversion process at a cost of $12.00 per unit?

• Yes

• No