Answer:
Net savings of buying from outside supplier $ 29,000
Explanation:
Computations from buying S 6 from outside supplier.
Costs to produce in house - $ 24 per unit
Units produced 21,000 units
Total costs to produce in house ( 21,000 units * $ 24) $ 504,000
Total costs to buy from outside ( 21,000 units * $ 20) <u> $ 420,000</u>
Savings on buying from outside <u>$ 84,000</u>
Adjustments of costs
Continuing Fixed manufacturing overhead
( $ 9 * 21,000 units) * 2/3 $ 126,000
Rental Income of manufacturing facilities <u> $ 71,000 </u>
Continuing costs <u>$ 55,000</u>
Net savings of buying from outside supplier $ 29,000
