Miller Manufacturing builds and markets personal computers for home and small business use. The company has been approached by an outside supplier offering to provide LCD monitors to the company for $96 each. The company's marketing director negotiated the deal personally and is thrilled about how much cheaper it will be to purchase the monitors from outside. Producing the following cost data, the manager proudly proclaims, "Look, a $22.40 per-unit savings!" Miller currently sells 30,000 LCD monitors along with its personal computer sales.

1. Assuming zero opportunity costs, should the company accept the outside offer?
2. If the monitors are purchased from outside, Miller can produce an alternative product that will contribute $600,000 per year toward covering indirect fixed overhead. Will this affect your decision in part (1)?
3. Redo your computations for part (1), this time assuming that Miller sells only 25,000 monitors. Is your answer different?
4. Again, assuming that Miller sells 25,000 monitors, how does your answer to part (2)change?

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30,000 Units per Year Per Unit Direct materials. . Direct labor. Variable manufacturing overhead Fixed manufacturing overhead, direct. Fixed manufacturing overhead, indirect. Total cost. $ 44.80 $1,344,000 16.00 288,000 1,296,000 43.20 $3,552,000 $118.40