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Part 554 is used in one of The Turtle Corporation's products. The company makes 12,000 units of this part each year. The company's Accounting Department

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Part 554 is used in one of The Turtle Corporation's products. The company makes 12,000 units of this part each year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials $ 6.30 Direct labor $ 5.70 Variable overhead $ 4.80 Fixed Costs: Supervisor's salary $ 7.00 Depreciation of special equipment $ 8.60 Common fixed overhead $ 7.20 An outside supplier has offered to produce this part and sell it to the company for $37.70 each. If this offer is accepted, the supervisor will be fired. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. If the outside supplier's offer were accepted, common fixed costs would be reduced by $17,000. The annual financial advantage (disadvantage) for the company as a result of buying the part from the outside supplier would be: O ($5,800) O ($39,800) ($149,800) O ($22,800)

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