Gordon Corporation produces 1,000 units of a part per year which are used in the assembly of one of its products.The unit cost of producing these parts is: The part can be purchased from an outside supplier at $20 per unit.If the part is purchased from the outside supplier, two thirds of the total fixed costs incurred in producing the part can be avoided.The annual financial advantage (disadvantage)for the company as a result of buying the part from the outside supplier would be:
A)$3,000
B)($1,000)
C)$7,000
D)($5,000)

Question

Gordon Corporation produces 1,000 units of a part per year which are used in the assembly of one of its products.The unit cost of producing these parts is:  The part can be purchased from an outside supplier at $20 per unit.If the part is purchased from the outside supplier, two thirds of the total fixed costs incurred in producing the part can be avoided.The annual financial advantage (disadvantage)for the company as a result of buying the part from the outside supplier would be:
A)$3,000 
B)($1,000) 
C)$7,000 
D)($5,000)

Quizplus · Accepted Answer

11ea7998_5c5c_ffe6_911b_051e4da8b3fc_TB2627_00_TB2627_00

Gordon Corporation Produces 1,000 Units of a Part Per Year