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what alternative is more desirable and by what amount assume that the company is cur 643160

(Outsourcing) Orlando Auto Accessories produces pickup truck bumpers that it sells on a wholesale basis to new car retailers. The average bumper sales price is $160.Normal annual sales volume is 300,000 units, which is the company’s maximum production capacity. At this capacity, the company’s per unit costs are as follows:

Direct material

$ 53 (including mounting hardware @ $15 per unit)

Direct labor

17

Overhead (2/3 is fixed)

45

Total

$115

A key component in producing bumpers is the mounting hardware used to attach the bumpers to the vehicles. Birmingham Mechanical has offered to sell Orlando Auto Accessories as many mounting units as the company needs for $20 per unit. If Orlando Auto accepts the offer, the released facilities currently used to produce mounting hardware could be used to produce an additional 4,800 bumpers. What alternative is more desirable and by what amount? (Assume that the company is currently operating at its capacity of 300,000 units.)

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