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Marty 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
Marty 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: Marty Monitors Annual Production Costs for 19-inch LCD Monitor Per Unit 9,000 Units Direct Materials $29.00 $261,000 Direct Labor $12.00 $108,000 Variable Overhead $11.00 $99,000 Production Supervisor's Salary $9.00 $81,000 Depreciation of LCD manufacturing equipment $5.00 $45,000 Allocated Fixed Overhead $15.00 $135,000 Total Cost $81.00 $729,000 An external supplier has offered to provide Marty Monitors 9,000 units of the same LCD monitor per year at a price of $46 each. Also consider the following information: The LCD manufacturing equipme
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