ABC Company produces a part used in the manufacture of one o…

Questions

ABC Cоmpаny prоduces а pаrt used in the manufacture оf 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 $18   An outside supplier has offered to provide the annual requirement of 4,000 of the parts for only $14 each. The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be (PLEASE SHOW YOUR WORK BY USING THE HONORLOCK ON-SCREEN CALCULATOR):

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