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o Cherry Company makes telephones. Currently, Cherry makes all the components of the telephones in-house. An outside company has offered to supply one component, part
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Cherry Company makes telephones. Currently, Cherry makes all the components of the telephones in-house. An outside company has offered to supply one component, part number X76, for $15 each. Cherry uses 15,000 of these components per year. Costs of X76 are as follows: Direct materials $2.00 Direct labor $2.00 Varlable overhead $3.00 Fixed overhead $6.00 Assume that all of the fixed overhead is allocated and cannot be avoided. Should Cherry purchase the part from the outside suppliers Oa. No, Income will decrease by 5120,000 Ob. Yes, Income will increase by 3140,200 c. Yes, Income will increase by 5278,500, d. No, income will decret by 3145,500 Oe. Yes come will by $200.500 Step by Step Solution
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