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ABC Company produces a part used to manufacture one of its products. The unit product costs $18, computed as follows: Direct materials $8 Direct labor

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ABC Company produces a part used to manufacture one of its products. The unit product costs $18, computed as follows: Direct materials $8 Direct labor 4 $4 Variable manufacturing overhead $1 Fixed manufacturing overhead $5 Unit product cost $18 An outside supplier has offered to provide the annual requirement of 4,000 of the parts for only $14 each. The company estimates that 40% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Based on these data, what would be the impact on operating income of purchasing the parts from the outside supplier? $8,000 increase O $4,000 decrease Variable manufacturing overhead $1 Fixed manufacturing overhead $5 Unit product cost $18 An outside supplier has offered to provide the annual requirement of 4,000 of the parts for only $14 each. The company estimates that 40% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Based on these data, what would be the impact on operating income of purchasing the parts from the outside supplier? O $8,000 increase O $4,000 decrease $2,000 increase $4,000 increase $2.000 decrease

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