Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $17, computed as follows:

Two alternatives, code-named X and Y, are under consideration at Guyer Corporation. Costs associated with the alternatives are listed below.

	Alternative X	Alternative Y
Materials costs	$ 44,000	$ 63,500
Processing costs	$ 48,300	$ 48,300
Equipment rental	$ 18,200	$ 18,200
Occupancy costs	$ 17,200	$ 25,700

What is the financial advantage (disadvantage) of Alternative Y over Alternative X?

Multiple Choice

• $155,700

• $(28,000)

• $(141,700)

• $127,700

An outside supplier has offered to provide the annual requirement of 7,800 of the parts for only $11 each. The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:

Multiple Choice

• $3 per unit on average

• ($6) per unit on average

• $4 per unit on average

• ($3) per unit on average