Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $22, computed as follows: Direct materials $ 7 Direct labor 8 Variable manufacturing overhead 3 Fixed manufacturing overhead 4 Unit product cost $ 22 An outside supplier has offered to provide the annual requirement of 4,700 of the parts for only $15 each. The company estimates that 50% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:

Aprice ceiling is “binding” if the price ceiling is set below the equilibrium price. suppose that the equilibrium price is $5. if a price ceiling is set at $6, this will not affect the market in any way since $5 remains a legally allowable price (since $5 < $6). a price ceiling of $6 is called a “non-binding” price ceiling. on the other hand, if the price ceiling is set at $4, the price ceiling is “binding” because the natural equilibrium price is $5 but that is no longer allowed. what happens when there is a binding price ceiling? at a price below the equilibrium price, quantity demanded exceeds quantity supplied. there is a shortage. normally, price increases eliminate shortages by increasing quantity supplied and decreasing quantity demanded. in this case, however, price increases are not allowed past the price ceiling. we therefore predict that the observed market price will be right at the price ceiling and there will be a permanent shortage. the observed quantity bought and sold will be dictated by the quantity supplied at the price ceiling. although consumers would like to buy more, there are no more units for sale

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Schonhardt corporation's relevant range of activity is 2,500 units to 5,500 units. when it produces and sells 4,000 units, its average costs per unit are as follows: averagecost per unitdirect materials $ 7.60direct labor $ 2.90variable manufacturing overhead $ 1.65fixed manufacturing overhead $ 2.90fixed selling expense $ 0.95fixed administrative expense $ 0.65sales commissions $ 0.75variable administrative expense $ 0.65if 4,500 units are produced, the total amount of fixed manufacturing cost incurred is closest to: multiple choicea $16,800b $11,400c $11,600d $15,400