Reference no: EM132956925

Question - Assume that a company makes 30,000 units of Part A each year. At this level of production, the company's accounting system reports the following cost per unit:

Direct materials $16

Direct labor 10

Variable manufacturing overhead 4

Fixed manufacturing overhead 8

Total cost per unit $38

An outside supplier has offered to sell the company 30,000 parts per year for a price of $33 per part. All of the company's fixed costs will continue to be incurred even if the part is purchased from the outside supplier. What is the financial advantage (disadvantage) of buying the parts from the outside supplier?

a. $(150,000)

b. $(90,000)

c. $150,000

d. $90,000