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Nem is used in one of Corporation A's products. The company makes 20,000 units of the tom each year. The company's reports the following costs
Nem is used in one of Corporation A's products. The company makes 20,000 units of the tom each year. The company's reports the following costs of producing items level of int Direct materials Per Unit Direct lahar $ 1.70 $2.70 Variable manufacturing overhead $ 3.80 Supervisor's salary Depreciation of special equipment An outside supplier has offered to produce items and sell it to the company for $17.00 each. If this offer is accepted the supervisor's way and all of the variable costs, including dret abor. can be avoided. The 59.00 special equipment used to make the item was purchased many years ago and has no salvage value or other use. The allocated general overhead represented costs of the tire company. The supplier's offer were accepted, only $30,000 of these allocated general overhead costs would be avoided. if management decides to buy items from the outside supplier rather than to continue making the Item, what would be the annual impact on the company's overal net operating income! Net operating income would decline by 5111,500 per year, Net operating income would decline by $132.000 per year. Net operating income would decline by $51,500 per year. Net operating income would decline by $81,500 per year
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