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Colorado Co. produces 5300 units of part Alpha-E for use in one its products. The following costs are incurred at that level of production:
Colorado Co. produces 5300 units of part Alpha-E for use in one its products. The following costs are incurred at that level of production: Direct materials $54000 Direct labor 160000 Variable overhead 83000 Fixed overhead 190000 If Colorado buys the part from an outside supplier, $42000 of the fixed overhead is avoidable. The outside supplier has offered to sell the units at $61 per unit. The increase (decrease) in net income from purchasing the part from the outside supplier would be O $37300 increase $15700 increase $15700 decrease O$38300 decrease
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