Lakeside Inc. produces a product that currently sells for $68.40 per unit. Current production costs...
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Lakeside Inc. produces a product that currently sells for $68.40 per unit. Current production costs per unit include direct materials, $19; direct labor, $21; variable overhead, $9.50; and fixed overhead, $9.50. Product engineering has determined that a certain part of the product conversion process could be outsourced. Raw material costs would not be affected, but direct labor and variable overhead costs would be reduced by 30%. No other opportunity is currently feasible for unused production capacity.
Required: a. What would be the net cost advantage or disadvantage if Lakeview decided to outsource part of the conversion process at a cost of $7.60 per unit? (Round your final answer to 2 decimal places.)
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