:Multiple Choice

• $10 per unit advantage.
• $1 per unit disadvantage.
• $3 per unit advantage.
• $4 per unit disadvantage.

F'itkln Company produces a pan used In the manufacture of one of its products. The unit product cost of the part Is $38. computed as follows Direct Materials 'E . nable Manufacm ring Overhead .E Fixed Manufactunng Ovemead E Unit Product Cost E An outside supplier has olT'ered to provide the annual requirement of 10.000 of the parts for only $25 each. The compa ny estimates that 30% of the xed manufacturing overhead costs above IMll continue Ifthe parts are purchased from the outside supplier. Assume that direct labour Is an avoidable cost In mls decision. Based on these data, what will be the perunit dollar advantage or disadvantage of purchasing the parts from the outside supplier