McGraw Company uses $9,250$ units of Part X each year as a component in the assembly of one of its products. The company is

presently producing Part X Internally at a total cost of $$155,250,$ computed as follows:

An outside supplier has offered to provide Part X at a price of $$19\mathrm{.}70$ per unit. If McGraw Company stops producing the part Internally.

one$-$third of the fixed manufacturing overhead would be eliminated. Assume that direct labor ls a varlable cost.

Required:

Prepare an analysis showing the annual financlal advantage or dlsadvantage of accepting the outside supplier's offer.