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An outside supplier has offered to sell 20.000 units of Part R-3 to Hoyal Company...

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Accounting

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An outside supplier has offered to sell 20.000 units of Part R-3 to Hoyal Company for $23.50 per part. If Royal Company accepts the wupplier's atter, Eie facieties now being used to manufacture Part R-3 could be rented out to anather company for $150.000 per yes. The costs of aroducine Part R-3 are avoidsble: however Aoyal Comparyy has deteravined that 96 of the foed manutacturing overhesd being mpled to Part R.3 would continue even if Alovat Company purchases Pat R-3 from the outside supplier. In the contest of Royal Compary/s decision to make or buy Part k3, thet 5150,000 rental hoome is ald avoidable cost varisis cost fued cost gunkcos! oppocturity cost

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