Question 23 (2.5 points)
Sharp Corporation produces 8,000 parts each year, which are used in the production
of one of its products. The unit product cost of a part is $36, computed as follows:
Variable production
cost
Fixed production cost
Unit product cost
$16
20
$36
The parts can be purchased from an outside supplier for only $28 each. The space in
which the parts are now produced would be idle and fixed production costs would
be reduced by one-fourth. Based on these data, the financial advantage
(disadvantage) of purchasing the parts from the outside supplier would be:
$24,000
($24,000)
$56,000
($56,000)
