Answered step by step
Verified Expert Solution
Question
1 Approved Answer
LG Co. makes 2,000 parts a month, which are used in the production of one of its products. The unit cost of the parts is
LG Co. makes 2,000 parts a month, which are used in the production of one of its products. The unit cost of the parts is shown below: Variable product costs $40 Fixed product costs S25 Total S65 The part can be purchased from an outside supplier at $54 per unit. The company estimates that 60% of the $25 fixed product costs remain unchanged no matter if the parts are purchased or not. However, if the parts are purchased, the company can rent out the freed facilities for $18,000 a month. Based on these data, what is the financial advantage or disadvantage of purchasing the part from the outside supplier? O $4 financial disadvantage per unit O $5 financial disadvantage per unit O $4 financial advantage per unit O S5 financial advantage per unit
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started