Ortega Industries manufactures 20,250 components per year. The manufacturing cost of the components was determined...
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Ortega Industries manufactures 20,250 components per year. The manufacturing cost of the components was determined to be as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total $180,000 390,000 105,000 270,000 $945,000 Assume that the fixed manufacturing overhead reflects the cost of Ortega's manufacturing facility. This facility cannot be used for any other purpose. An outside supplier has offered to sell the component to Ortega for $34. If Ortega Industries purchases the component from the outside supplier, the effect on operating profits would be a: Multiple Choice C) $13,500 increase. Type here to search
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