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Masse Corporation uses part G18 in one of its products. The company's Accounting Department r following costs of producing the 16,700 units of the part
Masse Corporation uses part G18 in one of its products. The company's Accounting Department r following costs of producing the 16,700 units of the part that are needed every year Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Per Unit $3.90 $4.60 $7.60 $8.30 $890 $5.90 Allocated general overhead An outside supplier has offered to make the part and sell it to the company for $32 00 each. If this offer is accepted, the supervisors salary and all of the variable costs, including direct labor, can be avoided The special equipment used to make the part was purchased many years ago and has no salvage value or other use The allocated general overhead represents fixed costs of the entire company If the outside supplier's ofler were accepted, only $22,700 of these allocated general overhead costs would be avoided products, generating an additional segment margin of $29,000 per year for that product Required a. Calculate the effect on the company's total net operating income of buying part G18 from the supplier rather than continuing to make it inside the company (Input the amount as a positive value. Omit the $" sign in your response.) Net operating income would be (Click to select) by S b. Which alternative should the company choose? O Make Buy
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