Question
SHOW WORK PLEASE- I HAVE ANSWER Make/Buy Talboe Company makes wheels which it uses in the production of children's wagons. Talboe's costs to produce 200,000
SHOW WORK PLEASE- I HAVE ANSWER
Make/Buy Talboe Company makes wheels which it uses in the production of children's wagons. Talboe's costs to produce 200,000 wheels annually are as follows: Direct materials $40,000 Direct labor 60,000 Variable manufacturing overhead 30,000 Fixed manufacturing overhead 70,000 Total $200,000 An outside supplier has offered to sell Talboe similar wheels for $0.80 per wheel. If the wheels are purchased from the outside supplier, $25,000 of annual fixed manufacturing overhead would be avoided and the facilities now being used to make the wheels would be rented to another company for $55,000 per year. If Talboe chooses to buy the wheel from the outside supplier, how would that affect the companys annual net operating income? (Increase by $50,000)
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