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9000 Sharp Company produces 8,000 parts each year, which are used in the production of one of its products. The unit product cost of a
9000 Sharp Company produces 8,000 parts each year, which are used in the production of one of its products. The unit product cost of a part is $36, computed as follows: Variable production costs.. $16 Fixed production costs 20 Unit product cost$34 Ihe parts can be purchased trom an outside supplier tor only $28 each. The space in which the parts are now produced would be idle and fixed production costs would be reduced by one-fourth. If the parts are purchased from the outside supplier, the annual impact on the company's operating income will be 28 8oco Make Purchase cost per unit.. Variable production costs per unit Fixed production costs per unit Total cost per unit Difference per unit Multiply by annual units produced Annual impact on net operating income 20 72 e19 23
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