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?

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