What is the net total dollar advantage (disadvantage)of purchasing the part rather than making it?
A) $(328,000).
B) $(64,000).
C) $264,000.
D) $548,000.

Question

Quizplus · Accepted Answer

The net total dollar advantage of purchasing the part rather than making it can be calculated by subtracting the total cost of purchasing the part from the total cost of making the part. Using the data given in the question, the net total dollar advantage of purchasing the part is calculated as follows:
Net advantage = ($2,492,000 + $328,000) - $2,856,000
= $2,820,000 - $2,856,000
= -$36,000
This shows that the company would have a net disadvantage of $36,000 if it decides to purchase the part instead of making it. Therefore, the best choice is to make the part.

What Is the Net Total Dollar Advantage (Disadvantage)of Purchasing the Part