The SP Corporation makes 40,000 motors to be used in the production of its sewing machines.The average cost per motor at this level of activity is: An outside supplier recently began producing a comparable motor that could be used in the sewing machine.The price offered to SP Corporation for this motor is $18.If SP Corporation decides not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided.Direct labor is a variable cost in this company.The annual financial advantage (disadvantage)for the company as a result of making the motors rather than buying them from the outside supplier would be:
A)$276,000
B)$86,000
C)($92,000)
D)$178,000

Question

The SP Corporation makes 40,000 motors to be used in the production of its sewing machines.The average cost per motor at this level of activity is:  An outside supplier recently began producing a comparable motor that could be used in the sewing machine.The price offered to SP Corporation for this motor is $18.If SP Corporation decides not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided.Direct labor is a variable cost in this company.The annual financial advantage (disadvantage)for the company as a result of making the motors rather than buying them from the outside supplier would be:
A)$276,000 
B)$86,000 
C)($92,000) 
D)$178,000

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The SP Corporation Makes 40,000 Motors to Be Used in the Production