Question
Starlight Company manufactures part 2HD for use in its production cycle. The per unit cost for 2,000 units of part 2HD are as follows: Direct
Starlight Company manufactures part 2HD for use in its production cycle. The per unit cost for 2,000 units of part 2HD are as follows:
Direct Labor | 25 |
Direct Materials | 5 |
Fixed Overhead | 20 |
Variable Overhead | 10 |
United Supreme has offered to sell Starlight 2,000 units of part 2HD for 50 per unit. If starlight accepts the offer, the released facilities could be used to save 30,000 in relevant costs in its manufacture of part 2HD. In addition, 10 per unit of fixed overhead applied to part 2HD would be eliminated.
What is the net advantage (disadvantage) of buying part 2HD?
Group of answer choices
0
30,000
70,000
(30,000)
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