The O.T. Company makes 35,000 motors to be used in the production of its sewing machines. The cost per motor at this level of activity is: Direct materials R4.50 Direct labour R4.60 Variable...

The O.T. Company makes 35,000 motors to be used in the production of its sewing machines. The cost per motor at this level of activity is:

An outside supplier has offered to supply all the motors the company needs for R15 each. If O.T. Company decided not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided.

If O.T. Company decides to continue making the motor, how much higher or lower would operating profit be than if the motors are purchased from the outside supplier?