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Colorado Corp. produces 5000 units of part A12E. The following costs were incurred at that level of production: Direct materials $ 57000 Direct labor
Colorado Corp. produces 5000 units of part A12E. The following costs were incurred at that level of production: Direct materials $ 57000 Direct labor 170000 Variable overhead 81000 Fixed overhead 190000 If Colorado buys the part from an outside supplier, $68000 of the fixed overhead is avoidable. If the outside supplier offers a unit price of $78, net income will increase (decrease) by O $(14000) $89000 O $132000 $(82000)
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