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What would the annual impact be on the company

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Reference no: EM132558893

Carley Company produces 2,000 parts per year, which are used in the assembly of one of its products. The variable cost of manufacturing each part is $64 and the fixed manufacturing costs total $36 per unit for a total unit product cost of $100. The part can be purchased from an outside supplier at $80 per unit. If the part is purchased from the outside supplier, two-thirds of the fixed manufacturing costs can be eliminated

Question 1: Which costs are relevant to this decision? Why?

Question 2: What would the annual impact be on the company's net operating income as a result of buying the part from the outside supplier?

Reference no: EM132558893

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