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Genent's Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1070 units are as follows: Direct materials $41.000
Genent's Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1070 units are as follows: Direct materials $41.000 Direct labor 7500 Variable owerhead costs 29.500 Pixed overhead costs 20.000 Total costs It is estimated that of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE 456 from the outside supplier. Genent's Engine Company has the option of purchasing the part from an outside supplier at $94.75 per unit. if Genent's Engine Company purchases 1070 TE 456 parts from the outside supplier per month, then its monthly operating income will increase by 521,783 decrease by 532483 decrease by 521.783 increase by 532483
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