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XYZ Industries manufactures 2 1 , 0 0 0 components per year. The total manufacturing costs for this level of production were determined as follows:
XYZ Industries manufactures components per year. The total
manufacturing costs for this level of production were determined as follows:
An outside supplier has offered to produce all units of the component
and sell it to for $ per unit. Additional information:
If purchases the component from the outside supplier, the
manufacturing facilities would be unused and could be rented out for
$ per year.
XYZ has determined that no fixed manufacturing overhead could be
avoided by purchasing the component from the supplier.
What is the total annual financial impact of purchasing the component from
the supplier instead of manufacturing it themselves?
Make sure to calculate the total impact, not the perunit amount. Use a negative
number to indicate a reduction in cash flows.
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