Q5) Composite Company produces 2,000 parts per year which are used in the assembly of one of its products. The unit product cost of these parts is

Variable manufacturing cost $64

Fixed manufacturing cost 36

Unit product cost $100

The part can be purchased from an outside supplier at $80 per unit. If the part is purchased from the outside supplier, two-thirds of the fixedmanufacturingcosts can be eliminated.

A) what costs, if any, are relevant to this decision? What costs are irrelevant?

B) What would the annual impact on the company's net operating income be as a result of buying the part from the outside supplier?