(TCO 7) Pearl Inc. makes 20,000 units per year of Part Y for use in one of its products. Pearl In…

(TCO 7) 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.(TCO 7) 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.

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