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What is the effect on income

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Question - Banong Company manufactures 10,000 components per year. The manufacturing cost of the components was determined as follows:

Direct materials Php 70,000

Direct labor 115,000

Variable manufacturing overhead 40,000

Fixed manufacturing overhead 60,000

Total Php 285,000

An outside supplier has offered to sell the component for $20.

Required - What is the effect on income if Banong Company purchases the component from the outside supplier?

Reference no: EM132979225

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