Each year Wright's Widgets buys 10,000 subcomponents that it needs in the production of its widgets from an outside supplier for $15 each. If Wright instead used its existing idle capacity to produce it in-house, the variable production costs would be $8 per unit and $3 of fixed production overhead would be allocated to each unit. Additionally, Wright would need to hire one quality control technician for $28,000 per year. The excess capacity that would be required is currently leased to another company for $25,000 per year. What is the advantage or disadvantage if Wright continues to buy the subcomponent from the outside supplier? 7

A. $37,000 advantage 

B. $13,000 advantage 

C. $3,000 disadvantage 

D. $17,000 disadvantage

Answer rating: 100% (QA)

C 3000 disadvantage The variable production costs would be 8 per unit and 3 of fixed production o... View the full answer