Please help with the following problem. Please show your steps.
Express Corporation can either manufacture a component part of its product or buy the part from an outside supplier. The cost of manufacturing one unit of the component part is Direct Materials $1 Direct Labor $1.50 Variable Overhead $0.75 Fixed Overhead (allocated) $0.90 = $4.15. The outside supplier had offered to sell the part to Express Corp for $3.95 per unit. Annual usage of the part is 200,000 units. If Express buys the part the vacated factory space can be rented out for $7,000 per month. Compute the change in Express Corporations 2007 Net Income if it decides to buy the part.© BrainMass Inc. brainmass.com March 4, 2021, 8:03 pm ad1c9bdddf
Consider if the Express decide to buy what changes in the costs would take place. Think of incremental changes in the cost
Savings in Direct material = -$1.00 (the plus sign ...
In the following posting, a problem involving decision making on annual net income is analyzed. Step by step calculations are given in the solution.