An outside supplier has offered to supply the tiller extensions for $725000. If the company accepts the offer $86000 of fixed costs can be avoided. What is the financial advantage (disadvantage) of accepting the supplier's offer?
An outside supplier has offered to supply the tiller extensions for $725000. If the company accepts the offer $86000 of fixed costs can be avoided. What is the financial advantage (disadvantage) of accepting the supplier's offer?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![6.A Company produces Optimist sailboats. The costs of producing 107000 tiller
extensions for use in the boats are as follows:
2/3
Direct labor
$2530
00
Direct materials 30200
Variable ove
Fixed overhead
18500
An outside supplier has offered to supply the tiller extensions for $725000. If
the company accepts the offer $86000 of fixed costs can be avoided. What is the
financial advantage (disadvantage) of accepting the supplier's offer?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7c0b7af0-08ea-4169-9d5b-fc2e112084f4%2Fca8e86c9-75fd-4230-a7de-279dd8f6daf8%2Fytilua_processed.jpeg&w=3840&q=75)
Transcribed Image Text:6.A Company produces Optimist sailboats. The costs of producing 107000 tiller
extensions for use in the boats are as follows:
2/3
Direct labor
$2530
00
Direct materials 30200
Variable ove
Fixed overhead
18500
An outside supplier has offered to supply the tiller extensions for $725000. If
the company accepts the offer $86000 of fixed costs can be avoided. What is the
financial advantage (disadvantage) of accepting the supplier's offer?
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