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Mike Company manufactures 10,000 units of part R-3 each year for use on its production...

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Accounting

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Mike Company manufactures 10,000 units of part R-3 each year for use on its production line. The cost per unit for part R-3 is: Matt Inc., an outside supplier, has offered to sell 10,000 units of part R-3 each year to Mike Company for $23.50 per part. If this offer is accepted, the facilities now being used to manufacture part R- 3 could be rented to another company at an annual rental of $40,000. In addition $4 per unit of the fixed overhead being applied to part R-3 would be completely eliminated. Prepare computations to show the net dollar advantage or disadvantage of accepting Matt Inc.'s offer

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