20. Greinke Company produces a part used in the manufacture of one of its produc

Question

20. Greinke Company produces a part used in the manufacture of one of its products. The unit product cost of the part is $33, computed as follows: $12 Direct m Direct labor.. Variable manufacturing overhead... Fixed manufacturing overhead... Unit product cost. requirement of 10,000 of the parts for only $27 each. The company estimates that 30% of the fixed manufacturing overhead costs above will continue if the parts are purchased from the outside supplier. All direct and variable costs are avoidable if the part is purchased from the supplier. Based on these data, the advantage or disadvantage per unit of purchasing the parts from the outside supplier would be (state in your answer whether it would be an advantage or disadvantage, and by how much PER UNIT) An outside supplier has offered to provide the annual

Explanation / Answer

Answer 20: Cost of producing parts in-house Direct material $                          12.00 Direct labour $                            8.00 Variable manufacturing overhead $                            3.00 Fixed manufacturing overhead $                            7.00 Cost of producing parts in-house $                          30.00 Cost of purchasing parts from outside supplier $                          27.00 The advantage of producing product from outside is $3 i.e $30-$27. $3, advantage

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