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Fillip Corp. makes 3,800 units of part U1 each year. The unit costs of producing the part at 3,800 units are as follows: $6.10 $4.50
Fillip Corp. makes 3,800 units of part U1 each year. The unit costs of producing the part at 3,800 units are as follows: $6.10 $4.50 Direct materials Direct labor Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead S6.80 $2.50 $8.60 $7.00 An outside supplier has offered to sell the part to the company for $21.80 each. If this offer is accepted, then: the supervisor's salary and all of the variable costs would be avoided, The allocated general overhead costs would not be avoided even if the company buys part U1 from the outside supplier, and the depreciation expense of the special equipment used to make the part will not be avoided even if the company buys part U1 from the outside supplier. If the company buys part U1 from the supplier, what would be the impact on the company's net operating income? Net operating income would decrease by $16,720. Net operating income would decrease by $7,220. Net operating income would increase by $7,220 Net operating income would increase by $16,720
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