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Nickle Industries manufactures 20,000 components per year. The manufacturing cost of the components was determined as follows: Direct materials $100,000 Direct labor 160,000 Variable manufacturing

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Nickle Industries manufactures 20,000 components per year. The manufacturing cost of the components was determined as follows: Direct materials $100,000 Direct labor 160,000 Variable manufacturing overhead 60,000 Fixed manufacturing overhead 80,000 An outside supplier has offered to sell the component for $17. If Nickle quits making the component and instead purchases it from the outside supplier, the manufacturing facilities would be unused but then could be rented out for $10,000. If Nickle purchases the component from the supplier instead of manufacturing it, the effect on income would be: $10,000 increase $10,000 decrease $50 increase $50,000 decrease some other amount

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