The Harris Corporation makes 32,000 lasers to be used in the production of its commercial printers. The average cost per laser at this level of activity is:

Direct materials	$ 9.10
Direct labor	$ 8.10
Variable manufacturing overhead	$ 3.25
Fixed manufacturing overhead	$ 4.20

An outside supplier recently began producing a comparable laser that could be used in the commercial printer. The price offered to Harris Corporation for this laser is $22.75. If Harris Corporation decides not to make the lasers, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Direct labor is a variable cost in this company. The annual financial advantage (disadvantage) for the company as a result of making the lasers rather than buying them from the outside supplier would be:

Multiple Choice

• $177,600

• 73,600

• ($60,800)

• $134,400