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Tau Industries manufactures 50,000 components per year. The manufacturing cost of the components was determined as follows: Direct materials Direct labor Variable overhead Fixed overhead
Tau Industries manufactures 50,000 components per year. The manufacturing cost of the components was determined as follows: Direct materials Direct labor Variable overhead Fixed overhead Total $ 200,000 150,000 100,000 60.000 $510,000 An outside suppler has offered to sell the component for $10. Fixed costs will remain the same if the component is purchased from an outside supplier What is the effect on income if Tau Industries purchases the component from the outside supplier? $50,000 decrease O $10,000 increase $10,000 decrease $50,000 Increase
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