An outside supplier has offered to make the part and sell it to the company for $32 each. If this offer is accepted, the supervisor's salary and all of the variable costs can be avoided. If the part were purchased instead of produced, $4 of the other fixed costs could be avoided. In addition, the space used to make the part could be used to make more of one of the company's other products, generating an additional segment margin of $45,000 per year for that product.
Make Buy
Direct materials $61,200.000 0
Direct labor 34,000 0
Variable overhead 67,320 0
Supervisor's salary 25,840 0
Depreciation of special equipment ?????? ??????
Allocated general overhead ?????? ????
Outside purchase price 0 $210,800
Opportunity cost ????? ????
Total cost ???? ?????
Required:
What would be the impact on the company's overall net operating income of buying the part?