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Getz Industries manufactures 10678 components per year. The manufacturing costs per component was determined as follows: Direct materials $228478 Direct labour 256373 Variable manufacturing overhead
Getz Industries manufactures 10678 components per year. The manufacturing costs per component was determined as follows: | |||
Direct materials | $228478 | ||
Direct labour | 256373 | ||
Variable manufacturing overhead | 51952 | ||
Fixed manufacturing overhead | 275641 | ||
An outside supplier has offered to sell Getz the component for $89. | |||
Assume Getz Industries could rent their unused manufacturing facilities for $30378 if they purchase the component from the outside supplier. If Getz purchases the component from the supplier instead of manufacturing it, the effect on income would be: |
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