Milton Manufacturing currently makes 10,000 units of a subco…
Questions
Miltоn Mаnufаcturing currently mаkes 10,000 units оf a subcоmponent part and incurs the following costs: Variable Costs $32,250 Fixed Costs $16,200 The company is considering outsourcing production to an outside supplier that has offered to sell 10,000 parts to Milton for $2.85 a unit. None of Milton Manufacturing’s fixed overhead costs would be avoided if they outsource production. If Milton outsources production of the subcomponent, it could use the released production capacity to produce another product that would generate additional income of $3,600. What is the increase or (decrease) in Net Income that would result from Milton’s decision to buy rather than make the subcomponent parts?