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dentura company manufactures a

CoursHeroTranscribedText: Dentura Company manufactures a part. OB-5, which is used on its production line. Dentura manufacturers and sells 18.000 units of 03-5 annually. making full use of its direct labour capacity. Follownng are the selling price and costs associated with part QB-5: Selling price per part $150.00 Costs per part: Direct material _ $35.00 Direct labPur 40.00 Fixed manufacturing overhead: Depreciation on equipment ($162,000 / 18,000) ' 9.00 _ Production supervisor's salary ($288.000 / 18,000) 16.00 , _ Selling and administrative costs M 130-0 Prot per part ' ' 5M The company has looked into the option of outsourcing part 08-5. A supplier of high-end products has approached Dentura Company and would be able to provide up to 18,000 parts per year at a price of $99 per part delivered to Dentura's facility. The selling and administrative costs include $225,000 xed cost for distribution of the part. Every unit of product that Hawk sells. whether outsourced or manufactured is allocated $20 of this 'xed ' distribution cost. The remainder of the selling and administrative cost would be saved if the parts are outsourced. . REQUIRED: Determine whether Dentura Company should accept the supplier's offer to provide 18.000 parts at a cost of $99 per part

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