6.A Company produces Optimist sailboats. The costs of producing 107000 tillerextensions for use in the boats are as follows:2/3Direct labor$253000Direct materials 30200Variable oveFixed overhead18500An outside supplier has offered to supply the tiller extensions for $725000. Ifthe company accepts the offer $86000 of fixed costs can be avoided. What is thefinancial advantage (disadvantage) of accepting the supplier's offer?

Given information is cost of producing tiller extensions and cost of purchasing from outside…

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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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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