Offered to sell byron the component

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Reference no: EM131135389

Bryon Industries manufactures 20,000 components per year. The manufacturing cost of the components was determined as follows:

Direct materials	$120,000
Direct labor	$150,000
Variable overhead	$60,000
Fixed overhead	$100,000

An outside supplier has offered to sell Byron the component for $17. If Bryon purchases the component from the outside supplier, fixed costs would be reduced by $20,000. The manufacturing facilities would be unused and could be rented out for $10,000. Should Byron accept the offer?

Reference no: EM131135389

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