A separate division of SGT, Inc. produces a component used in SGT's production of video...
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A separate division of SGT, Inc. produces a component used in SGT's production of video poker machines. The SGT cost accountants have determined the following costs of producing the 14,800 components that are needed every year. An outside supplier has offered to make the component and sell it to SGT, Inc, for $21.00 each. If this offer is accepted, the supervisor's salary and all the variable costs, including direct labor, can be avoided. The special equipment used to make the components was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $20,800 of these allocated general overhead costs would be avoided. Required: a. Prepare a report that shows the financial impact of buying the components from the supplier rather than continuing to make them inside the company. b. Which alternative should the company choose? Complete this question by entering your answers in the tabs below. Prepare a report that shows the financial impact of buying the component from the supplier rather than continuing to make it inside the company. Which alternative should the company choose
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