Answer:
financial disadvantage = $435,000 - $525,000 = ($90,000)
Step-by-step explanation:
outside vendor offer: cost per unit $35 x 15,000 = $525,000
production costs:
- direct materials $14 x 15,000 = $210,000
- direct labor $10 x 15,000 = $150,000
- variable manufacturing overhead $3 x 15,000 = $45,000
- fixed manufacturing overhead, traceable $6 x 15,000 = $90,000 ($60,000 are non-avoidable)
- fixed manufacturing overhead, allocated $9 x 15,000 = $135,000 (all are non-avoidable)
- total cost $42 x 15,000 = $630,000
avoidable production costs = $435,000
financial disadvantage = avoidable costs - cost to purchase carburetors from outside vendor = $435,000 - $525,000 = ($90,000)