Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Teche Corporation produces a part used in the manufacture of one of its products. The unit product cost is $26, computed in the table below

Teche Corporation produces a part used in the manufacture of one of its products. The unit product cost is $26, computed in the table below by the companys accountant.

Direct materials

$10

Direct labor

7

Variable manufacturing overhead

1

Fixed manufacturing overhead

8

Total product cost per unit

$26

An outside supplier has offered to provide the annual requirement of 5,000 of the parts for only $21 each. The company estimates that 75% of the fixed manufacturing overhead cost in the table above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost for this decision. Based on the data given, calculate the per-unit dollar advantage, or disadvantage, if Teche purchases the part from the outside supplier. In order to be marked correct, your answer must have BOTH the correct dollar amount per unit, and either the (correct) word ADVANTAGE or DISADVANTAGE. No partial credit.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financing California Real Estate Spanish Missions To Subprime Mortgages

Authors: Lynne P. Doti

1st Edition

184893601X, 978-1848936010

More Books

Students also viewed these Finance questions

Question

i need 5 2 7 .

Answered: 1 week ago

Question

Understand the roles of signs, symbols, and artifacts.

Answered: 1 week ago

Question

Discuss the key ambient conditions and their effects on customers.

Answered: 1 week ago

Question

Be familiar with the integrative servicescape model.

Answered: 1 week ago