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3. Lusk Corporation produces and sells 15,700 units of Product X each month. The selling price of Product X is $27 per unit, and variable

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3. Lusk Corporation produces and sells 15,700 units of Product X each month. The selling price of Product X is $27 per unit, and variable expenses are $21 per unit. A study has been made concerning whether Product X shoul discontinued. The study shows that $72,000 of the $107.000 in fixed expenses charged to Product X woulu .ot be avoidable even if the product was discontinued. If Product X is discontinued, the company's overall net operating income would: decrease by $47,800 per month increase by $12,800 per month increase by $47,800 per month decrease by $59,200 per month 1. Part 142 is used by Elgin Corporation to make one of its products. A total of 24,500 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Direc...aterials Direct labor Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit $9,20 $10.60 $7.20 $7.30 $9.70 $7.00 An outside supplier has offered to make the part and sell it to the company for $37.20 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make part A42 could be used to make more of one of the company's other products, generating an additional segment margin of $31,500 per year for that product. What would be the impact on the company's overall net operating income of buying part A42 from the outside supplier? Net operating income would increase by $31,500 per year. Net operating income would decrease by $264,950 per year. Net operating income would decrease by $39.550 per year. O Net operating income would decrease by $325,850 per year

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