QUESTION 28 Capple Industries manufactures and sells 15,000 components per year as one part of its production activities. The annual costs to manufacture the part are as follows: Direct materials S150,000 Direct labor $240,000 Variable manufacturing overhead $100,000 Fixed manufacturing overhead (allocated facility-level or common costs) $110,000 Total $600,000 If the component is purchased, a part of the manufacturing facility can be rented to another business for $7,000 per year. An outside supplier has offered to sell the component to Galaxy for $35 each. If Capple purchases the component instead of manufacturing it, the effect on Capple's annual net income would be a(n): $82,000 increase $35,000 decrease $75,000 increase $28,000 decrease