Bulan Inc. makes a range of products. The company's predetermined overhead rate is $20 per direct labor-hour, which was calculated using the following budgeted data: 
Component T6 is used in one of the company's products. The unit product cost of the component according to the company's cost accounting system is determined as follows: 
An outside supplier has offered to supply component T6 for $101 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. Bulan chronically has idle capacity.
Required:
Is the offer from the outside supplier financially attractive? Why?
Definitions:
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