Answer Happy

Lakeside Inc. produces a product that currently sells for $64.80 per unit. Current production costs per unit include direct materials, $18; direct labor, $20, variable overhead, $9.00, and fixed overhead, $9.00. Product engineering has determined that a certain part of the product conversion process could be outsourced. Raw material costs would not be affected, but direct labor and variable overhead costs would be reduced by 30%. No other opportunity is currently feasible for unused production capacity. Required: a. What would be the net cost advantage or disadvantage if Lakeview decided to outsource part of the conversion process at a cost of $7.20 per unit? (Round your final answer to 2 decimal places.)