Question 7 of 10
Sheridan Manufacturing incurs unit costs of $7.00 ($5.00 variable and $2.00 fixed) in making a sub-assembly part for its finished
product. A supplier offers to make 10,000 of the parts for $5.40 per unit. If it accepts the offer, Sheridan will save all variable costs and
$1.00 of fixed costs.
Prepare an analysis showing the total cost savings, if any, that Sheridan will realize by buying the part. (Round per unit answers to 2
decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or
parenthesis, e.g. (15,000).)
Number of units:
Per Unit
Make
$
