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Facilities presently devoted to production of part x

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Lee Company makes 30,000 units per year of Part X for use in one of its products. Lee Company incurred the following manufacturing costs when producing the 30,000 units of Part X.

Direct materials $800,000
Direct labor 450,500
Variable manufacturing overhead 95,000
Fixed manufacturing overhead 110,000
Total $1,455,500

Required

Assume Lee Company has no alternative use for the facilities presently devoted to production of Part X and that none of the fixed costs are avoidable. If the outside supplier offers to sell Part X for $45.00 each, should Lee Company accept the offer? Please clearly state your answer and support your answer with appropriate calculations.

Reference no: EM131754993

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