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Part F77 is used in one of Wilcutt Corporation's products. The company's Accounting Department reports the following costs of producing the 7,000 units of the part that are needed every year. Per unitDirect materials $7.00Direct labor $6.00"Variable overhead $5.60Supervisor's salary, $4.70Depreciation of special equipment $1.50Allocated general in overhead $5.40
Required:
Question 1: Prepare a report that shows the effect on the company's total net operating income of buying part F77 from the supplier rather than continuing to make it inside the company. Which alternative should the company choose?
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