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Joe`s farm produces 8,000 units of corn cans each week. The unit cost of corn cans are based on a production level of 8,000 units
Joe`s farm produces 8,000 units of corn cans each week. The unit cost of corn cans are based on a production level of 8,000 units per week as follows:
Variable cost per unit | $40 |
Fixed cost per unit | $20 |
Corn cans also can be purchased from another supplier at $50 per unit. If corn cans are purchased from the outside supplier, 25% of Joe's fixed production costs can be eliminated.
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If Joe purchases corn cans from the outside supplier, then what will happen to Joe's operating income?
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