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Exercise 2 CM Manufacturing has provided the following unit costs pertaining to a component they manufacture and use in the production of one of their
Exercise 2 CM Manufacturing has provided the following unit costs pertaining to a component they manufacture and use in the production of one of their main products: Direct materials Direct labor (variable) Variable manufacturing overhead Fixed manufacturing overhead $315 96 72 29 A supplier has offered to provide the component to CM manufacturing for $500 per unit. If CM Manufacturing were to buy the component from the supplier, they could use the released facilities to manufacture a product which would generate contribution margin of $16,000 annually. Assuming that CM Manufacturing needs 2,000 components annually and the fixed manufacturing overhead is unavoidable, what would be the impact on operating income if the company outsources
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