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Vance Refrigeration Corporation produces 14,000 compressors each year, which are used in the production of its air conditioners. The per unit product cost of this
Vance Refrigeration Corporation produces 14,000 compressors each year, which are used in the production of its air conditioners. The per unit product cost of this compressor part is $17, computed as follows: Variable manufacturing costs $11 Fixed manufacturing costs Unit product cost Instead of making the compressors, Vance can purchase them from an outside supplier for $16 each. If they buy the compressors, all variable manufacturing costs would be avoided, and one-half of the fixed manufacturing costs would also be avoided. Based on just this information, the financial advantage (disadvantage) of buying the compressors from the outside supplier would be: .8.1570,000) 6.514,000 C-542,000 d. 1828,000)
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