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Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a

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Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 5,000 units, are as follows: Direct materials $4.00 Direct labor 4.50 3.20 1.00 Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead 0.80 0.50 Total cost 14.00 Madison Company has offered to sell 5,000 units of the same part to Cruise Company for $15.20 per unit. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. Assume the company has no other use for its facilities. If Cruise Company buys the part, how much will net operating income increase or decrease? If income increases, your answer should be positive. If income decreases, put a negative sign (example: -1) in front of your

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