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javlo4461
javlo4461
11.05.2021 • 
Business

Collins Co. produces a part used in the manufacture of one of its products. The unit product cost is $30, computed as follows: Direct materials, direct labor, and variable overhead $18 Fixed overhead $12 Total $30 An outside supplier has offered to provide the parts for only $22 each. If the parts are purchased from the outside supplier, (1) the company estimates that 25% of the fixed overhead cost above could be eliminated; (2) the company can use the freed capacity to launch a new product, earning a contribution margin of $7 per unit. Based on these data, the per-unit dollar financial advantage or disadvantage of purchasing from the outside supplier would be: Multiple Choice $1 financial disadvantage $5 financial advantage $6 financial advantage $2 financial disadvantage

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