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Pharoah Manufacturing incurs unit costs of $8.00($5.00 variable and $3.00 fixed) in making a sub-assembly...

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Accounting

Pharoah Manufacturing incurs unit costs of $8.00($5.00 variable and $3.00 fixed) in making a sub-assembly part for its finished
product. A supplier offers to make 16,800 of the parts for $5.50 per unit. If it accepts the offer, Pharoah will save all variable costs
and $1.00 of fixed costs.
Prepare an analysis showing the total cost savings, if any, that Pharoah will realize by buying the part. (Round per unit answersto 2
decimal places, e.g.15.25. If an amount reducesthe net income then enter with a negative sign preceding the number, e.g.-15,000 or
parenthesis, e.g.(15,000).)
Per Unit Make Buy
Number
of units:
$ $ $
$ $
The decision should be to .

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