Pearl Inc. makes 20,000 units per year of Part Y for use in one of its products. Pearl Inc. incurred the following

manufacturing costs when producing the 20,000 units of Part Y.

Direct materials                                 $300,000

Direct labor                                           125,000

Variable manufacturing overhead      50,000

Fixed manufacturing overhead          175,000

Total                                                      $650,000

Required

Assume Pearl Inc. has no alternative use for the facilities presently devoted to production of Part Y and that none of the fixed costs are avoidable. If the outside supplier offers to sell Part Y for $23 each, should Pearl Inc. accept the offer? Please clearly state your answer and support your answer with appropriate calculations.

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