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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?
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