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Exercise 2-33 Differential Cost (LO 2-1, 2-10) Orbital Communications, Inc., manufactures communications satellites used in TV signal transmission. The firm currently purchases one component for
Exercise 2-33 Differential Cost (LO 2-1, 2-10) Orbital Communications, Inc., manufactures communications satellites used in TV signal transmission. The firm currently purchases one component for its satellites from a European firm. An Orbital Communications engineering team has found a way to use the company's own component, part number A200, instead of the European component. However, the Orbital Communications component must be modified at a cost of $770 per part. The European component costs $10,300 per part. Orbital Communications' part number A200 costs $6,100 before it is modified. Orbital Communications currently uses 14 of the European components per year. Required: Calculate the annual differential cost between Orbital Communications' two production alternatives. Annual differential cost
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