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Express Corporation can either produce a component part of its product or purchase part from the outside supplier. Cost of manufacturing one unit of component part is Direct Materials $1 Direct Labor $1.50 Variable Overhead $0.75 Fixed Overhead (allocated) $0.90 = $4.15. Outside supplier had offered to sell part to Express Corp for $3.95 per unit. Annual usage of part is 200,000 units. If Express purchases part vacated factory space can be rented out for $7,000 per month. find out change in Express Corporations 2007 Net Income if it makes decision to buy part.

Business Management, Management Studies

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