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RED Industries manufactures 20,000 components per year. The manufacturing cost per component was determined to be as follows: Direct materials$30,000 Direct labor45,000 Variable manufacturing overhead10,000
RED Industries manufactures 20,000 components per year. The manufacturing cost per component was determined to be as follows:
Direct materials$30,000
Direct labor45,000
Variable manufacturing overhead10,000
Fixed manufacturing overhead35,000
TOTAL$120,000
An outside supplier has offered to sell the component for $5.25.
If RED Industries purchases the component from the outside supplier, the effect on income (profit) would be a
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