Pawistik Corporation makes computer screens that are used in the assembly of laptops which Pawistik sells to the general public. The costs per screen are as follows:
|
Direct materials |
$12.00 |
|
Direct labour |
15.00 |
|
Variable overhead |
15.00 |
|
Fixed overhead |
22.00 |
Computer Accessories Inc. has offered to sell Pawistik 50,000 of the screens for $45 each. If Pawistik accepts this offer, the company will be able to eliminate $200,000 in fixed manufacturing overhead costs. What is the cost or benefit of purchasing from Computer Accessories?
- $50,000 benefit
- $750,000 cost
- $150,000 cost
- $200,000 benefit