Problem $3$

Part B$29$ is used in one of Samuel Corporation's products. The company's Accounting

Department reports the following costs of producing the $8,300$ units of the part that are needed

every year.

An outside supplier has offered to make the part and sell it to the company for $$30\mathrm{.}00$ each. If

this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor,

can be avoided. The special equipment used to make the part was purchased many years ago and

has no salvage value or other use. The allocated general overhead represents fixed costs of the

entire company. If the outside supplier's offer were accepted, only $$4,600$ of these allocated

general overhead costs would be avoided. In addition, the space used to produce part Q$89$ could

be used to make more of one of the company's other products, generating an additional segment

margin of $$14,300$ per year for that product.

Required:

Determine the financial advantage $($disadvantage$)$of accepting the outside supplier's offer.