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Should jeff company take advantage of the supplier

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Jeff Company produces a part that is used in the manufacture of one of its products. The annual costs associated with the production of 11,000 units of this part are as follows:

Direct materials ............$25,000
Direct labor .............$34,000
Indirect production costs variable .....$65,000
Indirect production costs fixed ......$40,000
Total costs ..............$164,000

A supplier is willing to sell 11,000 units of the part to Jeff Company for $12.50 per unit. When examining the indirect production costs fixed, Jeff Company determines $10,000 is avoidable.

Required:

If there are no alternative uses for the facilities, should Jeff Company take advantage of the supplier's?

Reference no: EM13990101

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