Type M is the strongest
Is that what you were looking for I'm not a 100% sure.
Answer:
$4 advantage
Explanation:
In this question we need to compare the cost between the relevant cost and the outside supplier cost
The relevant cost is
= Direct material per unit + direct labor per unit + variable manufacturing overhead per unit + fixed manufacturing overhead per unit
= $8 + $5 + $3 + $5 × 80%
= $8 + $5 + $3 + $4
= $20
Since 80% of the fixed manufacturing cost above is eliminated so we considered the same
And, the outside supplier cost is $16
So based on the above calculation, the financial advantage is
= $20 - $16
= $4 advantage
This shows the company should purchased from outside supplier as it saves $4
Bro i don't know this is my brothers college homework
