Bady Inc.makes a range of products.The company's predetermined overhead rate is $14 per direct labor-hour,which was calculated using the following budgeted data: 
Component M3 is used in one of the company's products.The unit cost of the component according to the company's cost accounting system is determined as follows: 
An outside supplier has offered to supply component M3 for $108 each.The outside supplier is known for quality and reliability.Assume that direct labor is a variable cost,variable manufacturing overhead is really driven by direct labor-hours,and total fixed manufacturing overhead would not be affected by this decision.Bady chronically has idle capacity.
Required:
Is the offer from the outside supplier financially attractive? Why?
Definitions:
Foreign Branch Plant
A subsidiary production or service facility of a company located in another country from the parent company.
Foreign Distribution Agreement
A legal contract between entities based in different countries for the distribution of goods or services.
Joint Venture Agreement
A legal document that outlines the terms and conditions under which two or more parties undertake a specific business venture together.
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