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You make component X in-house at a cost of $8 per unit, which consists of $1 direct labor per unit, $3.50 direct materials per unit,
You make component X in-house at a cost of $8 per unit, which consists of $1 direct labor per unit, $3.50 direct materials per unit, $3 fixed overhead per unit, and $0.50 variable overhead per unit. You need 1,000 units of X per month. An outside supplier has offered to sell component X to you at $6 per unit. If you outsource the production of X to the supplier, how much will your profit change in the short term? increase by $6,000 increase by $2,000 decrease by $1,000 decrease by $2,000 increase by $1,000
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