Part U67 Is Used in One of Broce Corporation's Products

question 144

Essay

Part U67 is used in one of Broce Corporation's products.The company's Accounting Department reports the following costs of producing the 7,000 units of the part that are needed every year.
An outside supplier has offered to make the part and sell it to the company for $21.40 each.If this offer is accepted,the supervisor's salary and all of the variable costs,including direct labor,can be avoided.The special equipment used to make the part was purchased many years ago and has no salvage value or other use.The allocated general overhead represents fixed costs of the entire company.If the outside supplier's offer were accepted,only $6,000 of these allocated general overhead costs would be avoided.
Required:
a.Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside the company.
b.Which alternative should the company choose?

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Definitions:

Cytotoxic T Cells

Immune cells responsible for eliminating cancer cells, attacking cells infected mainly by viruses, or destroying cells that have sustained various forms of damage.

Phagocytosis

The process by which cells, such as macrophages or neutrophils, engulf and digest microscopic particles or pathogens, serving as an important mechanism in the immune response.

Immunoglobulin

Antibody found in the gamma globulin portion of plasma.

Inflammation

A biological response to harmful stimuli, such as pathogens or damaged cells, involving immune cells, blood vessels, and molecular mediators to facilitate healing.