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Major Manufacturing Co. produces and sells 15,000 parts per year as apart of its production activities. The annual costs to manufacture the part are as
Major Manufacturing Co. produces and sells 15,000 parts per year as apart of its production activities. The annual costs to manufacture the part are as follows: Direct materials $150,000 Direct labor $200,000 Variable manufacturing overhead $90,000 $72,000 Fixed manufacturing overhead (common costs allocated across products) $48,000 Fixed manufacturing costs directly traceable to this part. (Rent on equipment only used only to make this part. The equipment will not be rented if Industry, Inc. purchases the component Total $560,000 An outside supplier has offered to sell the part to Major Manufacturing Co. for $34 each. If Major Manufacturing Co. purchases the part instead of producing it, what would be the effect on Major Manufacturing Co.'s annual net income? Be sure to indicate if the change is an increase or a decrease. Put you final answer (S amount and increase or decrease) at the top. Show your work after that
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