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Business, 25.12.2019 03:31 3jazybraxy

Supler company produces a part used in the manufacture of one of its products. the unit product cost is $18, computed as follows:

direct materials = $8

direct labor = $4

variable manufacturing overhead = $1

fixed manufacturing overhead = $5

unit product cost (total of above costs) = $18

an outside supplier has offered to provide the annual requirement of 4,000 of the parts for only $14 each. it is estimated that 60 percent of the fixed overhead cost above could be eliminated if the parts are purchased from the outside supplier. based on these data, the per-unit dollar advantage or disadvantage of purchasing from the outside supplier would be:

$1 disadvantage

$1 advantage

$2 advantage

$4 disadvantage

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