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Part U1G is used by Mcyean Cooporation 50 make one of its pectucts. A total of 15 ood units of this part are peoduced and

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Part U1G is used by Mcyean Cooporation 50 make one of its pectucts. A total of 15 ood units of this part are peoduced and used every yeac- The company's Accounting Departiment reports the following costs of producing the part at the level of activity? An ousside supplier has offered to make the part and sell it to the compary for $2630 each if this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labot, can be avolded. The special equipment used to make the part was purchased mahy years ago and has no salvage value or other use. The allocated generat overhesd represens fowd costs of the entire company, none of which would be avoided if the port were purchased instead of produced internaly In addition. the space used to make part Lif could be used to make mare of one of the compacy's other products, generating an add tional segment margin of 527000 per-yowar for that protkuct. The anntill financial attvantage id sadvantage) for the company as a result of buying part U16 from the outside supplier should be: Mutial Cholce $27000 c\$16 400

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