Pure Everfresh manufactures pet fountains that allow companion animals to drink from a flowing stream of water whenever they are thirsty. The company started out

producing all of the necessary parts for the fountains, including the motor. An motor manufacturing company has offered to sell one type of motor to Pure Everfresh for a

cost of $

$7$

$0$

$$per unit. To evaluate this offer, Pure Everfresh has gathered the following information relating to its own cost of producting the motors internally:

$*$

One

$-$

third supervisory salaries; two

$-$

thirds depreciation of special equipment

$($

no resale value

$)$

Required:

Assuming the company has no alternative use for the facilities that are now being used to produce the motors,

what would be the financial advantage

$($

disadvantage

$)$

$$of buying

$1$

$5$

$,$

$0$

$0$

$0$

$$motors from the outside supplier?

Should the outside supplier's offer be accepted?