Gibson Company produces 1,000 parts per year, which are used in the assembly of one...
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Gibson Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is: variable manufacturing cost... $12 fixed manufacturing cost... 9 unit product cost.... $21
the parts can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, two thirds of the fixed manufacturing costs can be eliminayed. a) Should Gibson Company continue to make this product or buy it? b) What would be the annual impact on the company's net operating income as a result of buying the part from the outside supplier?
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