Supler Corporation produces a part used in the manufacture of one of its products. The unit cost of the product is $21, calculated as follows:

Direct materials	ps	8
Direct labour		7
Variable manufacturing overhead		2
Fixed manufacturing costs		4
unit cost of product	ps	21

An outside vendor has offered to provide the annual requirement of 4,400 parts for only $10 each. The company estimates that 50% of the aforementioned fixed manufacturing overhead costs could be eliminated if parts are purchased from an outside vendor. Assume that direct labor is an avoidable cost in this decision. Based on these data, the economic advantage (disadvantage) of purchasing the parts from the external supplier would be ?

Answer rating: 100% (QA)

The total cost of producing 4400 parts using Supler Corporations current method is Total cost Direct ... View the full answer