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Question - ?Mable's Engine Company manufactures part Z92 used in several of its engine models. Monthly production costs for? 1,000 units are as? follows:
Direct Materials: $30,000
Direct Labour: $8,000
Variable Overhead Costs: $21,000
Fixed Overhead Costs: $5,000
Total Cost: $64,000
Mable's Engine Company has the option of purchasing the part from an outside supplier at? $61 per unit. It is estimated that all of the fixed overhead costs assigned to Z92 will remain if the company purchases Z92 from an outside supplier.
If? Mables's Engine Company purchases? 1,000 Z92 parts from the outside supplier per? month, then compute its monthly operating income?
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