Murray Corp. currently makes 9,230 subcomponents a year in one of its factories. The unit costs to produce are:
Description |
Per unit |
Direct materials |
$6 |
Direct labor |
2 |
Variable manufacturing overhead |
2 |
Fixed manufacturing overhead |
3 |
An outside supplier has offered to provide Murray Corp. with the 9,230 subcomponents at a $15 per unit price. Fixed overhead is not avoidable. If Murray Corp. decides to buy from the outside supplier, the impact to net income will be ?
If positive, enter the number, if negative, place a –sign before your number
Relevant cost of making
= (6+2+2)* 9230
= 92,300
Cost of bought from supplier = 9230 * 15
= 138,450
So,if bought from supplier net income decreases by (-46,150)
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