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Carver Company manufactures a component used in the production of one of its main products. The following cost information is available: Direct materials Direct labor
Carver Company manufactures a component used in the production of one of its main products. The following cost information is available: Direct materials Direct labor (variable) Variable manufacturing overhead Fixed manufacturing overhead $420 110 OA. Operating income would decrease by $70,000. B. Operating income would increase by $20,000. C. Operating income would increase by $90,000. D. Operating income would decrease by $20,000. 90 30 A supplier has offered to sell the component to Carver for $650 per unit. If Carver buys the component from the supplier, the released facilities can be used to manufacture a product that would generate a contribution margin of $20,000 annually. Assuming that Carver needs 3,000 components annually and that the fixed manufacturing overhead is unavoidable, what would be the impact on operating income if Carver outsources? ...
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