Business, 23.03.2020 18:00 santos36755

The SP Corporation makes 40,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of activity is: Direct materials $5.50 Direct labor $5.60 Variable manufacturing overhead $4.45 Fixed manufacturing overhead $4.75An outside supplier recently began producing a comparable motor that could be used in the sewing machine which has been made available to Fedora at a price of $17 per motor. If Fedora was not making the motors on its own, there would be no other use for its production facilities and none of its fixed manufacturing overhead cost could be avoided. Direct labor is a fully variable cost. The annual financial advantage (disadvantage) for the company as a result of making the motors itself rather than buying them from the outside supplier would be:

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The SP Corporation makes 40,000 motors to be used in the production of its sewing machines. The aver...

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