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Zip Products currently makes a product in house. Costs to make the product are: direct materials, $2.10; direct labor, $0.50; manufacturing overhead, $1.80. An outside
Zip Products currently makes a product in house. Costs to make the product are: direct materials, $2.10; direct labor, $0.50; manufacturing overhead, $1.80. An outside supplier has offered to sell them the product for $3.50 per unit. Direct material and direct labor are traceable to the product and would be eliminated. Of the $1.80 of overhead only $0.80 could be eliminated. They currently produce 10,000 units. What would be the effect of purchasing from and outside supplier? O $19,000) 0 $1,000 0 $9,000 O $(1,000)
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