Value Electronics uses a standard part in the manufacture of different types of radios. The...
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Value Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 28,000 parts is $90,000, which includes fixed costs of $30,000 and variable costs of $60,000. The company can buy this part from an external supplier for $5 per unit and avoid 10% of the fixed costs. If Value Electronics decides to outsource the production of the part, how will it impact its operating income?
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