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Genent's Engine Company manufactures part 1456 used in several of its engine models, Monthly production costs for 1070 units are as follows: Direct materials 141.000

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Genent's Engine Company manufactures part 1456 used in several of its engine models, Monthly production costs for 1070 units are as follows: Direct materials 141.000 Dimct labor 7500 Variable overhead corte 29.500 Fixed welcome 20002 Totalcos 590.000 It is estimated that 8% of the fixed overhead costs assigned to T6456 will no longer be incurred if the company purchases TEA56 from the outside supplier. Genent's Engine Company has the option of purchasing the part from an outside supplier at $94.75 per unit. I Genent's Engine Company purchases 1070 T456 parts from the outside supplier per month, then its monthly operating income wil decrease by $32,483 decrease by $21.783 increase by $32.483 increase by $21,783

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