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Data table Less: Profit from another product River Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has
Data table Less: Profit from another product River Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has offered to make the component at a cost of $12.60 per unit. River Enterprises' current cost is $16.50 per unit of the component, based on the 90,000 components that River Enterprises currently produces. Read the requirements. following calculations: (Click the icon to view the information.) None of River Enterprises' fixed costs will be eliminated if the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $25,000 of contribution margin per year. Requirement 1. If River Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? (Enter a "0" for any zero balances. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy.)
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