Lee Company makes 30,000 units per year of Part X for use in one of its products.

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.(Points : 25)

Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"