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ABC Industry Inc. has a manufacturing capacity to produce 10,000 units of a necessary part in-house. The production manager provided the details of the production
ABC Industry Inc. has a manufacturing capacity to produce 10,000 units of a necessary part in-house. The production manager provided the details of the production cost.
Direct Materials $50,000
Direct Labour 30,000
Variable Manufacture Overhead 50,000
Fixed Manufacture Overhead 20,000
If ABC can purchase it at $14 each in the market, it can avoid $10,000 of the fixed manufacturing overhead and generate $15,000 additional income. If ABC would choose to buy instead of make, what is the incremental income or loss?
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