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please answer in 10 min ...

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Accounting

please answer in 10 min
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4. IzzyLU Corporation uses part B76 in one of its products. The company's Accounting Department reports the following costs of producing the 12,000 units of the part that are needed every year Per Unit $7.20 $7.10 $3.50 $4.70 Direct Material Direct labor Variable Overhead Supervisors Salary Depreciation on Special Equipment $3.40 Traceable Fixed Cost $50 Allocaed Fixed Cost $1.90 An outside supplier has offered to make the part and sell it to the company for $22 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. (10 points) Required: a. What is the effect on the company's total net operating income of buying part B76 from the supplier rather than continuing to make it inside the company. CIRCLE ONE Increase Decrease BUY hich alternative should the company choose? CIRCLE ONE) MAKE

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